South Africa is relatively stable at present, with modest economic growth predicted, owing to a number of economic, public and political factors.

This was unpacked at a panel discussion during Standard & Poor’s (S&P) Global's yearly South Africa conference, hosted under the theme ‘Navigating South Africa’s Credit Landscape in Changing Times’.

While the country retains stable credit ratings for now, which is important to unlock foreign capital and investment, it requires greater growth, which entails a consistently good political framework and stability in the country.   

S&P analyst Gardner Rusike indicated that its rating for South Africa was currently at BB with a stable outlook, adding that it has not changed the stable rating for the past two years.  

The reason for this favourable outlook includes several factors, such as the role of the central bank in anchoring inflation policy, and the role of the judiciary, which provides good checks and balances.  

The company’s forecast of South Africa’s economic growth outlook, at 1.6% this year, is quite positive compared with the forecasts made by others.

National Treasury’s Duncan Pieterse indicated that treasury was concerned about a number of factors when forecasting the country’s economic growth.

He said Treasury prepares four forecasts, two of which are made public, and the other two internal. It is currently in the process of updating its Budget forecast.

With regard to this, there are a number of factors that are of concern to the organisation and that it is taking cognisance of in its update.   

He highlighted that this includes the situation in China particularly, not only its growth, but also the larger structural shift away from consumption, which will affect South Africa’s export performance. 

There is also the indirect link to Brexit, with South Africa’s automotive sector highly exposed to Britain for exports.

In terms of domestic factors, Eskom and other State-owned entities are included, both in terms of risk to the country’s fiscus and potential economic growth.

There is also the scenario of extended load-shedding on the country’s economy to consider.

On the upside, better prices for materials such as palladium bode well for the country’s exports and this is being revisited in the updated forecast.

Meanwhile, Bureau for Economic Research chief economist Hugo Pienaar indicated that, according to a number of indicators the company has looked at, the data shows that the country has not performed that well in the first half of the year to date.

For example, he noted that the manufacturing sector has been underperforming.

Therefore, owing to these indicators, the organisation is taking a more pessimistic view than others this year, with a likelihood of 1% to 1.5% growth.

BNP Paribas senior economic analyst Nic Borain, meanwhile, spoke about the political climate and its effects on the country’s economy.

He noted that, from 2004, when the African National Congress peaked at 69.4% of the national votes, its support has been declining, especially under the “lost decade” of Jacob Zuma’s tenure.

BNP predicts a lower voter turnout at this year’s election, typical of maturing democracies and, based on this, expects the ANC to garner less support this year, while opposition parties’ share of the votes is likely to rise.

If this outcome manifests, inventors would view the stability as favourable, said Borain.

Pienaar noted that if the ANC gets a high 60% or more, the narrative is likely to be that Cyril Ramaphosa will have a freer rein to push through reforms. This could then lead to a repeat of the “Ramaphoria” experienced last year, with markets initially rallying – but the big questions is if this can be sustained.

However, he cautioned that this view does not account for the internal dynamics of the ANC, which, if it does get high numbers, may implement reforms, but this will take more time than the public and markets expects.