S&P Downgrades South Africa Credit Rating Outlook from 'Positive' to 'Stable'

International credit rating agency Standard & Poor's (S&P) has downgraded South Africa's sovereign credit rating outlook from 'positive' to 'stable' due to the ongoing power crisis. This move is interpreted as a response to the recent severe electricity shortage. S&P also warned of the possibility of further downgrades if the power shortage persists.

According to major foreign media on the 9th (local time), S&P made this downgrade late the previous afternoon, citing South Africa's severe power crisis. South Africa's sovereign credit rating remained at the speculative grade (junk) 'BB-/B'.

Night view of downtown Johannesburg with lights off due to rolling blackouts
[Image source=Yonhap News]

S&P warned that if the South African government fails to make progress in resolving the power shortage, the rating could be lowered further. South Africa has been experiencing worsening chronic power shortages recently, resulting in daily load shedding with power outages lasting 6 to 12 hours a day.

S&P also lowered South Africa's real GDP growth forecast for this year from 1.5% to 1%, while projecting an average growth of 1.7% from 2024 to 2026.

In its report, S&P pointed out, "Due to South Africa's ongoing power shortage, it has been unable to fully capitalize on the global rise in consumer goods prices, so the downside risks to the outlook remain prominent."