South Africa measured favourably in most indices except economic growth, which the Treasury has forecast will be 0.5% this year, a Moody’s representative said yesterday.
The agency rates South Africa two notches above sub-investment grade with a negative outlook and is due to publish its next review next month.
Fellow ratings agencies S&P’s and Fitch have the country a step above junk.
The three agencies have warned that increased political infighting along with slowing growth could trigger downgrades.
“South Africa is doing relatively well in a lot of the indices when you strip out growth.. and when we look at a sovereign rating you’ve got to look through the cycle,” Moody’s representative Sylvia Chahonyo told a business conference.
In his budget speech last week, Finance Minister Pravin Gordhan called for an end to “political noise” to help the economy recover and avoid downgrades.
Meanwhile, manufacturers showed their biggest swing into pessimism on record last month, the Barclays purchasing managers’ index (PMI) released yesterday showed.
A 13.2-point plunge in expected business conditions in six months’ time caused the overall index to fall 2.6 points to 45.9 points, the monthly poll of purchasing managers done by Stellenbosch University’s Bureau of Economic Research(BER) showed.
September’s figure was revised down to 48.5 points from the previously reported 49.5 points.
The consensus of economists was that the PMI would recover to near the neutral level of 50.
A result under 50 indicates manufacturing output is shrinking.
The bureau said that manufacturing last month had reached its lowest level since January and augured poorly for chances of recording fourth-quarter GDP growth.
Four of the five main PMI subcomponents declined month on month, with only the index measuring suppliers’ performance ticking up slightly last month.
Concerns included continuing worries about the future of Gordhan and ongoing #FeesMustFall protests.