London - South Africa may be over the worst of its economic downturn
with potential growth of over 1% next year, Finance Minister Pravin
Gordhan said on Monday, noting President Jacob Zuma had expressed
confidence in him.
Speaking to reporters on the sidelines of the
FT Africa Summit, Gordhan also said the country, which is teetering on
the lowest investment grade ratings rung, hoped to avoid a downgrade to
"We predict over 1% next year," Gordhan said.
He declined to comment on this year's growth expectations, saying he would talk about this at the end of October.
He earlier told the summit: "We are going through a difficult economic patch at the moment… but we may well have bottomed out."
data seems to bear out that optimism, with growth in the April-June
period at 3.3%, the highest in six quarters. The economy shrank
1.2% in the three months to March.
The economy and
currency are also under pressure from reported friction between Zuma and
Gordhan, who is popular with investors and business.
been the subject of a probe by an elite police unit investigating his
role in a spy unit within the revenue service. Opposition parties have
described the probe as a "witch-hunt". Zuma denies a rift between him
"As long as I am in this job, I have his confidence," Gordhan told the conference in response to a question.
added: "There have been any number of statements from the president
endorsing my position, but you equally know that the lifespan of a
political office can end with one phone call, or it can start with one
Despite such worries, South
Africa had no trouble raising money in international markets last week,
selling a two-tranche bond totalling $3bn, taking orders far in
excess of that.
Gordhan said it was too early to say whether South Africa would sell more Eurobonds.
see. We normally have a ceiling of 10% for foreign borrowing and
we stick to that and see what opportunities arise," he said.
major potential headwind for South Africa is the possibility of a credit
ratings downgrade to "junk" or sub-investment grade. A downgrade would
mean that more conservative funds will be forced to sell South African
Asked how worried he was about a downgrade, Gordhan said he would not want to see that happen.
have put a lot of hard work in to ensure that we present a united
national front and also that we communicate a lot better," he said.
and SP Global Ratings both score South Africa at BBB-, the lowest rung
on the investment ladder. Both agencies hold a negative outlook on the
rating and the next round of reviews is due in December.
Asked about reform priorities, Gordhan named improving electricity supply and speeding up infrastructure projects.
"We beat the curve," he said, when asked about progress in boosting power supplies.
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