JOHANNESBURG - S&P said on Tuesday it now forecast that South Africa’s gross domestic product would grow 2 percent in 2018, doubling its previous estimate. It sees growth of 2.1 percent next year, up from a prior forecast of 1.7 percent.
S&P said its improved forecasts partly reflected stronger investor sentiment after the change in South Africa’s leadership and ensuing policy announcements.
But it warned that economic growth of just above 2 percent, or 0.5 percent in per capita terms, is low for a country with South Africa’s income levels, and not enough to reduce sky-high unemployment — currently around 27 percent.
Rusike said faster debt stabilisation than the Treasury had outlined in its 2018 budget would also be ratings-positive but would not necessarily lead to an upgrade.
He said: “It is up to South Africa to continue with reforms that have been initiated, and the realisation of those reforms is what can be supportive to a higher rating path.”
The Treasury said in February’s budget that gross debt was seen narrowing to 56 percent of GDP in the 2020/21 fiscal year from nearly 60 percent seen in the October mid-term budget statement.
Since then Ramaphosa has reappointed the finance minister Zuma fired in 2015, sacked some ministers allied to Zuma, put another respected former finance minister in charge of struggling state-owned firms and suspended the head of the revenue service.