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‘While the worst may be over, SA must still work to avoid downgrade’

Economists say SA needs to work towards improving growth to avoid a downgrade in December.

This picture taken on 17 January, 2012 shows a close-up of a page of the Ratings agency Fitch website. Picture: AFP.

JOHANNESBURG - Economists have welcomed Fitch's decision to keep its outlook unchanged at a BBB- with a stable outlook, saying it suggests South Africa has been able to "arrest" its decline in ratings over the past few years.

Fitch is the third agency to keep its rating unchanged, keeping the country above junk status.

Economist Goolam Ballim says now the country needs to work towards improving growth to avoid a downgrade in December.

"There was a forthcoming month with a centrepiece of reconstruction focused on the social dialogue between the government, business and labour helping to forge a better growth outcome over the near to medium term. It may just be that South Africa has passed the worst in terms of negative credit judgment."

Investment Solutions' Lesiba Mothatha says there appears to be determination to implement economic reforms.

At the same time, it's emerged the economy contracted by more than expected in the first quarter of this year.

It fell by 1.2 percent from 0.4 percent in the fourth quarter of last year.

Treasury has also welcomed the decision by the ratings agency.

The department says this decision gives the country time to put its finances on a more sustainable path.

Fitch highlighted a couple of risks that could lead to the rating being lowered, however government says it's mindful of these and is fully aware that the next six months are critical.

It says it's stepping up the implementation of its 9-point plan, and other measures to boost the economy.

Government says it will work to double its efforts at restoring confidence and boosting investment among local and international investors.

It says it will unblock obstacles to faster employment growth in key sectors, and undertake fiscal state-owned company and regulatory reforms.

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