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We expect Moody’s will cut South Africa’s sovereign credit rating to ‘junk’ before the end of March. While the downgrade has largely been priced in, the exclusion from the World Government Bond Index holds considerable uncertainty. A temporary overreaction by the rand and a mild increase in government borrowing costs are likely, but we do not expect a capital exodus.
As the new year begins, what are the main dynamics to watch in Africa? Our latest Research Briefing discusses some of our top calls for 2020 as well as some less-likely but high-impact developments that warrant being on our radar.
Rising private consumption is driving growth in Africa’s best performing economies and this will remain the case over the medium term. This reliance on domestic growth drivers has allowed these countries to benefit from the commodity price slump and will to some extent insulate them from the global growth slowdown, providing investors attractive investment opportunities.