Two perspectives emerged in the aftermath of the well-publicised downgrade of South Africa’s sovereign debt by international credit ratings
agency Fitch.

One view, which reflects the typical stance of afropessimists, is that the downgrade was warranted as a result of a combination of relatively weak
economic growth, the regular occurrence of violent and lengthy labour unrest, constrained electricity and growing dissatisfaction over inefficient service delivery in poor communities.

According to Fitch, one of the biggest risks to the South African economy was the lengthy strike in the platinum sector, which was responsible for a contraction in GDP growth in the first quarter of the year.

Another flag that was raised by the agency is the increase in public sector debt since the recession of 2008/09. Fitch’s sentiments echo to some extent the findings of the latest Global Competitiveness Report (GCR) published by the World Economic Forum (WEF).

Although South Africa has maintained its overall level of competitiveness over the past decade, its performance in several critical areas, including education, health, business regulation and the labour market is alarming and even lags behind several other African countries.

It seems, however, that Fitch has developed a knack for ex post decision-making, based on a small selection of indicators exhibiting negative trends, whilst ignoring the bigger picture and likely short-term future prospects.