Moody's Ratings | SA economic outlook upgraded from stable to positive

Added: 2026-05-24

[00:00:00]Moody's attributed the shift in the outlook to what it sees as the gradual strengthening in the country's fiscal performance as national treasury has become stricter in its debt management as well as a keen focus on the structural reforms which are reported to be on track in energy, logistics and water among other areas. Standard Bank senior economist Dr. Elna Moolman says the bank agrees with Moody's that South Africa is heading in the right direction economically. Moody's upgraded the outlook on South Africa's sovereign credit rating to positive from stable.

[00:00:33]This signals a possibility that it could ultimately upgrade the rating itself as well.

[00:00:39]This essentially reflects the improvement in South Africa's fiscal prognosis and specifically reaching the milestone of a peak in the debt to GDP ratio. Moody's now concur with government that South Africa's debt to GDP ratio should start to decline gradually.

[00:00:56]Moody's still acknowledges the short-term risks including the potential impact of the Iran war on the South African economy.

[00:01:03]But it argues that it is more important that we have firm commitment to fiscal consolidation. In other words, government is really committed to putting our fiscal position on a sustainable path again alongside ongoing fundamental structural growth reforms.

[00:01:20]While Moody's noted the economic disruptions brought about by the current war in the Middle East, it believes South Africa's policy responses would help guide the country through the short-term difficulties. Moody's expects the current structural reform efforts will result in greater investment in the economy peaking growth reaching 2% as early as 2028. Makwe Masilela, chief investment officer at Makwe Fund Managers, believes current initiatives will see the local economy start to fulfill its potential. Currently we are dealing now with the oil shock, but as it stands we are just doing fine. And I think when it comes to our exporters as well, they have to continue to look for decent markets out there so that we don't rely on a particular market, but we get to be diversified. Then definitely we will be able to get the necessary economic growth that will be able not just to attract investors, but also to encourage the current companies back home to make sure that whatever cash they have, they continue to deploy it to grow their companies and create [snorts] the necessary jobs that are really needed.

[00:02:37]Moody's change to a positive outlook for South Africa comes after S&P Global decided to upgrade South Africa's sovereign credit rating to BB from BB- in November last year. The further prospect of the country's credit rating being upgraded will help to improve the cost of capital going forward. This is critical for a developing economy like South Africa, which is going to continue to need ample capital to invest in the country's future growth.

[00:03:03]Nompumelelo Siziba, SABC News, Johannesburg.