Why investors are worried about S.Africa - CNBC Africa

Why investors are worried about S.Africa

Southern Africa

by Trust Matsilele 0

South Africa's Finance Minister Pravin Gordhan provided a Budget last week aimed at building investor confidence. PHOTO: GCIS

Foreign investors are looking at South Africa with concern; this is according to Stanlib’s chief economist, Kevin Lings.

“Part of the concern applies generally to all emerging markets as they have fallen out of favour with disappointing growth,” he said.

He added that some of the economies were demonstrating weaknesses like Brazil and Russia

“A low growth environment is not attractive to investors; a currency under pressure is also another factor, the risk of credit downgrade worries investors,” added Lings.

[READ MORE: South Africa's economy slows further, ratings eyed] 

“The encouraging thing is that the minister of finance is responding to that pressure indicating in his budget that government will be far more disciplined.”

He welcomed the move by the finance minister to engage private sector.

The government also wants to involve the private sector more fully in the economy that demonstrates the willingness for open engagement," said Lings.

Lings said his hope was for the medium term as the country was locked in a low growth environment.

 

“From a political environment perspective, South Africa has gone through a rough patch which is reflected in the possible downgrade. The replacement of the finance minister shocked most people inside and outside this country who focus on how this country performs,” he added.

He warned that the country was still faced with credit downgrade.

“We are still facing a credit rating downgrade and there is still risk that we will fall into junk status but as long as the finance minister is able to do his job South Africa will be able to lift its growth rate.” 

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