'Moody's is being quite lenient, we have got to implement policy changes'

Despite a downgraded growth expectation for 2019, Moody's says there is a "low likelihood" of a downgrade in South Africa's credit rating.

On Tuesday Moody's revealed that it had revised down the country's growth forecast for 2019 from 1% in June to 0.7%, citing slow pace in policy implementation.

Stanlib Asset Management chief economist Kevin Lings says the firm has generally been 'fairly positive' about South Africa's economy despite its deterioration.

Explaining what is used to determine a low investment grade, Lings says the firm's view may be that the deterioration is not as stark as what is seen in other countries.

They constantly remind us that they are assessing South Africa relative to other emerging markets. On a relative basis South Africa doesn't represent the type of risk that they have seen in many other countries.

Kevin Lings, Chief economist - Stanlib Asset Management

He says Moody's is being quite lenient and that government have got to implement policy changes.

The second thing, they pointed that out in their conference meeting, is that they do see that government is talking about the right types of reforms, they are saying that government needs to go from talking about the right type of reforms into implementing it.

Kevin Lings, Chief economist - Stanlib Asset Management

I guess they do buy into the notion that government is trying to stabilise government finances etc and put South Africa on a better path. The question is will they still give us this time?

Kevin Lings, Chief economist - Stanlib Asset Management

I think there have been warnings, I think they have been quite lenient. They clearly are willing to tolerate further leniency but that is not endless.

Kevin Lings, Chief economist - Stanlib Asset Management

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