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Electricity shortages, which dragged on growth in 2022 and 2023, are expected to ease, but sporadic incidents of load-shedding could still occur, Fitch added in a statement issued
Fitch Ratings affirmed South Africa’s long-term foreign-currency issuer default rating at BB- with a stable outlook. The rating agency said South Africa’s rating is supported by the country’s favorable debt structure, strong institutions, and a credible monetary policy framework.
Those factors, however, are balanced against low real GDP growth, a high level of poverty and inequality, and a high government debt/GDP ratio. Fitch said it expects real GDP growth of 0.9% this year, after 0.7% last year. Real GDP is forecast to show growth of 1.5% in 2025 and 1.3% in 2026.
Growth is hampered by a struggling logistics sector, deeply entrenched structural factors, particularly high levels of inequality, poverty and unemployment, and weak investment, Fitch said in a statement. The agency further said that it expects the weakness to persist, despite robust demographics. Electricity shortages, which dragged on growth in 2022 and 2023, are expected to ease, but sporadic incidents of load-shedding could still occur, Fitch added in a statement issued.
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While headline inflation eased to 4.6% in July, Fitch expects it to fall to 4.5% by the end of the year, 4% in 2025 and 2026, as food and oil prices continue their slowdown.
