adminYesterday’s data showed the economy expanded an annualised 0,9 percent in the first quarter, the slowest pace since a 2009 recession. While there is “no imminent threat” to South Africa’s credit rating, Fitch may lower its growth forecasts this year, Carmen Altenkirch, a sovereign analyst, said in an interview in Marrakech, Morocco. S&P credit analyst Christian Esters said the data increases “downside risks” to its estimates.
S&P and Moody’s Investors Service downgraded South Africa’s debt by one level last year and kept the outlook at negative. Fitch lowered the nation’s rating to BBB, the second-lowest investment grade, in January.
“My biggest concern with South Africa is a perpetual underperformance of GDP and the first quarter figures speak to this generally weaker-than-expected trend,” Altenkirch said yesterday. “If growth comes out weaker than expected for 2013 the fiscal numbers will look just that slightly worse.”
In the budget published on February 27, the National Treasury forecast Africa’s largest economy would expand 2,7 percent this year and 3,5 percent in 2014. It projected the budget gap to narrow to 4,6 percent in the year through March 2014, from 5,1 percent in the previous year, and to 3,9 percent in fiscal 2015.
Those projections are under threat from mining strikes and a contraction in manufacturing. Growth slowed to an annualised 0,9 percent in the first quarter from 2,1 percent in the previous three months, Statistics South Africa said in a report on Tuesday. The median estimate in a Bloomberg survey of economists was 1,6 percent.
“There is a likelihood GDP growth will be below the assumption that was underlying the budget for 2013, 2014, which in turn means that revenue will likely be somewhat lower and the deficit might be higher,” Esters said in an interview in Marrakech yesterday. “The downside risk has increased for GDP growth to be lower than our forecast.”
S&P will monitor labor disputes in the mining industry in the next few months, he said. — Bloomberg.
Online Reporter