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Economists hope rand will stabilise following S&P decision

The rand made some gains after the agency kept its rating at BBB-minus, with a negative outlook.

Picture: Supplied

JOHANNESBURG - Economists are hoping the rand will recover further after ratings agency Standard & Poor's Global kept the South African credit outlook unchanged on Friday.

The rand made some gains after the agency kept its rating at BBB-minus, with a negative outlook.

But government has been warned to implement economic reform.

S&P has warned that economic growth is extremely low, with revised outlook of 0.6 percent for this year.

The agency has given the country six months to turn the economy around and has warned that continued political instability is also a threat.

At the same time, some economists believe S&P has provided South Africa with clear indications on what to focus on to prevent a downgrade in future.

The analysts say S&P's unsurprising credit announcement has been a massive relief.

Economist Goolam Ballim says the agency has been clear on which areas government should be focusing on.

"More becomes labour environment, create certainty in the mining sector and more generally any policy which aims to instill greater business confidence."

Ballim says the ratings agency has been clear with respect to areas it thinks needs boosting growth prospects.

"That's helpful because it means that South Africa has a clear set of aspirations that it could target, to put to rest any lingering doubt that South Africa could fall into sub-investment status."

Meanwhile, S&P associate director Gardner Rusike has said the agency recognises government's prudent policies.

"If we see that these factors are implemented and they improve the credit matrix - that will be supportive of the credit ratings."

Rusike has noted that government is trying to implement change in these areas.

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