South Africa Sees Investment Grade Horizon by 2028 as Economy Recovers

South Africa's economy is on the mend according to Goldman Sachs, which predicts that the country will regain its investment-grade credit status by 2028. The downgrade from BBB+ to BB- over more than a decade was due to sluggish growth and escalating public debt. However, recently there has been a turnaround with fiscal deficits tightening, debt decreasing, and infrastructure issues easing.

The shift towards a coalition government after the 2024 move away from decades of single-party ANC rule has fostered more predictable economic policies. Goldman Sachs notes that this has created an environment where medium-term GDP growth can average about 2.5%, up from the previous decade's 1%.

Credit rating upgrades are also on the horizon, with agencies like S&P and Moody's potentially boosting South Africa's ratings to BB+/Ba1 within a year. This could lead to a full investment-grade rung by 2028.