JOHANNESBURG – Rating agency Moody’s yesterday warned that South Africa and some of its emerging market peers, such as Turkey, Argentina and Brazil, faced heightened risks due to weak institutions, unpredictable domestic politics and geopolitical risk.
Alastair Wilson, Moody’s managing director for global sovereign risk, said South Africa also had below-trend growth prospects.
“South Africa’s vulnerability similarly reflects high reliance on external capital (though mainly denominated in local currency), set against a context of a moribund economy, high inequality and political stasis ahead of the 2019 presidential elections,” Wilson said.
The Finance Ministry last month halved its South African growth forecast from 1.5 percent to 0.7 percent but expects growth to reach 2.3 percent in 2021.
One potential challenge facing the country was the foreign ownership of assets. Foreign holdings of rand-denominated bonds are the highest among emerging markets at 41 percent.