(Bloomberg) — In 2018, South Africa got a new president, two new finance ministers and slumped into a recession. Next year maybe even more bumpy.
Here’s a look at the key economic and political risk factors to watch out for in 2019:
After Finance Minister Tito Mboweni painted a bleak picture for finances in October, attention will turn to his plans to boost growth and prevent debt from spiralling out of control at the budget presentation in February. The national budget is a “key pressure point,” Intellidex’s head of capital markets research, Peter Attard Montalto, said in a note. The absence of concrete plans to boost economic growth could trigger a change to negative in the outlook on South Africa’s credit ratings.
A downgrade to junk by Moody’s Investors Service would trigger forced selling of bonds by investors tracking investment-grade indexes, including Citigroup Inc.’s World Government Bond Index. That’s “very likely,” according to David Hauner, Bank of America Merrill Lynch’s head of cross-asset strategy for Eastern Europe, the Middle East and Africa. Moody’s didn’t publish a review as scheduled in October, while S&P Global Ratings and Fitch Ratings Ltd. have kept their sub-investment grade assessments. Ratings companies may be waiting for the budget data before making another call.