Some economists have warned that unless South Africa puts its economic house in order soon, it faces the possibility of an investment downgrade.
On Saturday, Moody‘s changed it’s outlook on South Africa’s credit rating from stable to negative. However, it affirmed at B- AA3 long-term foreign and local-currency issuer ratings.
The rating affirmation takes into account the country’s deep, stable financial sector and robust macro-economic policy framework.
Chief economist at the centre for Risk Analysis Ian Cruickshanks explains what South Africa’s current credit rating entails.
“What it means is that in the long term, foreign investment will be affected, and we will be seeing disinvestment rather than investment. What does that mean? It means that foreigners are not building new factories, putting in new plans and improving the rate of activity. We’re looking at job destruction rather than job creation.”
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