"Downside risks to this forecast remain prominent since
South Africa has been unable to fully capitalize on the global
upswing in commodity prices while continued electricity
shortages signal a potentially difficult winter ahead," it said.
The country's National Treasury said it acknowledged
S&P's decision and reiterated its commitment to reduce rolling
power cuts, which have plagued households and businesses for
well over a decade in Africa's most industrialised economy.
South Africa has had scheduled power cuts every day so far
this year, after record power was shed from the grid in 2022
with outages lasting up to 10 hours a day.
(Reporting by Akriti Sharma in Bengaluru and Bhargav Acharya in
Johannesburg; Editing by Alistair Bell, Nellie Peyton and Sherry
Jacob-Phillips)
(Adds quote, GDP growth forecasts and details)
JOHANNESBURG, March 9 (Reuters) - S&P Global late
Wednesday downgraded its outlook on South Africa to "stable"
from "positive", citing infrastructure constraints and a severe
power crisis.
South Africa's economy contracted more than expected in the
last quarter of 2022, as an escalation in rolling power cuts
contributed to most sectors from agriculture to mining
shrinking, data showed this week.
The rating agency said economic growth in South Africa was
facing increasing pressure due to infrastructure constraints,
particularly from severe electricity shortages.
S&P affirmed South Africa's 'BB-/B' foreign currency
sovereign credit ratings, but warned that it could lower them if
the government's ongoing reforms to address the power crisis do
not progress as planned.
It also revised down its real GDP growth forecast for 2023
to 1% from 1.5% previously, and said it expects growth to
average 1.7% in 2024-2026. Real GDP growth was 2% in 2022, S&P
said.
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