CityPress - - Business -

Fitch Rat­ings has had South Africa on a BBB rat­ing with a neg­a­tive out­look since June last year, but con­tin­ued bad news could drive this lower to­wards junk sta­tus, which would de­ter in­vestors.

Ed Parker, an an­a­lyst at the Fitch Lon­don of­fice, said the Stats SA fig­ures show­ing that the econ­omy had shrunk by an an­nu­alised 1.3% in the sec­ond quar­ter as man­u­fac­tur­ing fell into re­ces­sion were “bad num­bers that were worse than ex­pected”.

“If weak growth goes neg­a­tive through the third quar­ter, it could con­trib­ute to con­sid­er­ing a move to down­grade at the end of the year.”

The coun­try’s cred­it­wor­thi­ness is another cru­cial fac­tor and any moves that will in­crease deficits will add to the chances of a down­grade.

Strikes in the gold sec­tor will also have a bear­ing on the next sov­er­eign rat­ing.

And although South Africa’s float­ing ex­change rate acts as a buf­fer to ex­ter­nal shocks, “the fall­ing ex­change rate is another in­di­ca­tor of the pres­sures fac­ing the coun­try”, he said.

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