Johannesburg - Ratings firm S&P Global Ratings said on Monday it does not see South Africa's economy slipping into a recession in the short term despite slashing its growth forecast by more than half last week.
S&P affirmed the investment grade rating of Africa's most industrialised country on Friday but lowered its economic growth estimate to 0.6 percent from 1.6 percent.
Read: S&P verdict on SA 'strengthens Gordhan'
President Jacob Zuma, in a statement on Saturday, said the S&P review was the result of “the sterling work that has been done over the last few months to turn our economy around”.
“The decision... which follows on the footsteps of yet another encouraging decision by Moody's demonstrates that working together we can reignite our economy, attract investment and create jobs for our people,” he added.
S&P, Moody's and peer Fitch, whose own review is expected in the next few days, have all warned of possible cuts to South Africa's credit standing after Zuma rattled investors by changing finance ministers twice in less than a week in December last year.
Read: Ratings reprieve: SA needs action now
Analysts said S&P's decision, which came after Moody's also held its Baa2 rating on Pretoria last month, was a nod to extensive firefighting efforts by Finance Minister Pravin Gordhan, re-appointed in December to calm jittery markets after a previous stint in 2009-2014.
But they also said any policy slip-ups or political rhetoric that backs the rising speculation that Gordhan does not enjoy Zuma's full support, could induce a downgrade by year-end.
“We still firmly believe that South Africa's propensity to make policy mistakes, the lack of key reforms, and uncertainty in the economy mean that we are on a near inevitable path towards sub-investment grade,” said Nomura analyst Peter Attard Montalto.
“The politics just don't allow National Treasury the space to be 'good' at growth-boosting reforms.”
Zuma has faced increasing opposition accusations of mismanaging the country ahead of key local government elections on August 3.
He survived an April impeachment vote called by the opposition after the Constitutional Court said he breached the law by ignoring an order to repay state funds spent on renovating his home.
REUTERS