S.Africa won't be affected by US downgrade: reserve bank
The South African Reserve Bank on Monday said the Unites States credit rating downgrade and sovereign debt concerns in Europe won't affect the country's financial stability.
"South Africa has deep and liquid financial markets which continue to function even during this difficult financial turmoil," said a joint statement by the governor of the Reserve Bank and the National Treasuary.
"The National Treasury and the Reserve Bank will continue to actively monitor the situation to mitigate any financial risks and any adverse short term and long term effects on the broader economy," said the statement.
Last Friday ratings agency Standard & Poor's docked the US from a sterling AAA to a AA+ rating, largely because of the failure of bitterly divided US leaders to reach a consensus on containing the country's spiraling debt.
In January ratings agency Fitch raised its outlook for South Africa from "negative" to "stable," saying the country's economy had weathered the global recession well.
"All rating agencies rate South Africa at an investment grade. Standard and Poor's in particular, affirmed South Africa's sovereign rating and even revised the rating outlook from negative to stable."
The institutions said they were confident that the 3.4 percent growth forecast and fiscal projections outlined during the national budget would be met.
But anaysts believe that the problems in developed economies would eventually affect the local economy which is already showing signs of slowing.
"We are not in nearly such a bad situation but if the world economy fell into recession we would also shrink," Nedbank economist Nicky Weimar told local media.
© 2011 AFP