Moody's says weak investment hurts South Africa's credit rating prospects

Source: Reuters.

"Any conversation about South Africa's sovereign credit outlook needs to start with economic growth," Evan Wohlmann, senior credit officer and lead analyst for South Africa at Moody's, told a media webinar.

"There will be upward pressure on the rating if we see South Africa making significant progress in alleviating structural constraints on economic potential."

Moody's next review of South Africa's credit rating is scheduled for Friday, 5 December 2025. It currently rates South Africa at Ba2, with a stable outlook.

South Africa lost its investment grade rating from Moody's in March 2020.

Wohlmann said the government's progress in pushing through reforms such as improving regulatory hurdles in logistics and energy should help nudge economic growth up to around 1.6% next year from an expected 1% this year. However, he said weak investment remains a hindrance.

Foreign direct investment in the country fell to $2.5bn in 2024, its lowest in seven years and down 29% from 2023, according to the United Nations Conference on Trade and Development's World Investment Report 2025.

Moody's said private infrastructure investment remains insufficient to lift South Africa's potential growth significantly beyond 2%.

Wohlmann cautioned that the rating could face downward pressure if economic growth prospects were to deteriorate, resulting in weakened fiscal strength or setbacks in structural reforms that point to diminished policy effectiveness.

Ratings agency S&P rates South Africa at 'BB-/B' and has a "positive" outlook, while Fitch has a BB- rating on South Africa, also with a stable outlook.