S&P revises South Africa’s outlook to positive on better reforms, growth potential

(Reuters) – Ratings agency S&P revised South Africa’s outlook to “positive” from “stable” on Friday, citing plans for accelerated economic reforms by the new government of national unity and a pickup in private investments.

The coalition government, formed in June after the African National Congress lost its parliamentary majority for the first time in 30 years, boosted business confidence.

S&P also stated that since the formation of the government, debt yields and portfolio inflows have improved. This has resulted in easing financing conditions and currency strengthening.

The ratings agency also expects a slight pick up in GDP growth this year as more private sector-driven electricity supply comes onstream to help curb electricity shortages, alongside increased private participation in railway, ports and water sectors.

After eight months of uninterrupted power supply and the promise of faster economic reform under the coalition, S&P views a positive growth potential for South Africa.

The agency also affirmed its ‘BB-/B’ foreign currency rating and ‘BB/B’ local currency rating.