(The following statement was released by the rating agency)
May 30 - Standard & Poor’s Ratings Services said that it expects GDP growth for South Africa to slow to 2.7% this year from 3.1% in 2011.
In its report published today, “Q&A: South Africa’s Economy Still Suffers From Skill And Infrastructure Bottlenecks,” Standard & Poor’s looks beyond the numbers at the key economic issues facing South Africa: first, endemic unemployment that calls for vigorous labor market reforms and a push for skills development; and second, a widening current account deficit.
Like many emerging economies, South Africa faces the challenge of balancing the need to spend on infrastructure and increase workforce skills against cutting its current account deficit.
In an uncertain global environment, Jean-Michel Six, Standard & Poor’s Chief Economist for Europe, the Middle East, and Africa, answers the following questions from Konrad Reuss, Managing Director for South Africa and southern Africa, about the economic outlook for the Republic of South Africa (foreign currency BBB+/Negative/A-2, local currency A/Negative/A-1, South Africa national scale zaAAA/--/zaA-1):
-- What’s your growth forecast for South Africa and what do you see as the major challenges ahead?
-- How do you characterize South Africa’s performance of 3.1% real GDP growth last year?
-- Why do you believe growth will slow in 2012?
-- Do you believe that growth in domestic demand can offset weaker foreign trade?
-- But retail sales picked up in March according to the latest figures released by Statistics South Africa. Isn’t this a positive signal?
-- What about monetary policy? Hasn’t credit growth underpinned consumer demand?