South Africa’s economic growth prospects remain weak for the year

Reserve Bank of South Africa’s key leading indicator released on Tuesday which offers pointers to the economy’s performance for the next six months fell slightly, confirming signs of a stagnating South African economy.

The indicator declined 0.6% to 92.2 points in January from 92.8 in December last year. But compared to a year ago, it deteriorated 4% after a 3.8% year-on-year contraction in December. Data confirmed economists' concerns that SA’s economic growth prospects this year are dim.

SARB last week again revised down its economic growth forecast for this year to 0.8% from 0.9%, while the Treasury last month cut its projection to 0.9% from 1.7%. The economy grew 1.3% last year.

Slow economic growth has been flagged as a risk to SA’s sovereign credit rating. Moody’s is currently assessing the country's plans for growth and a downgrade will bring its rating in line with that of Fitch and Standard & Poor’s — a notch above junk.