South Africa's economy contracted more than expected in the last quarter of 2022, as an escalation in rolling power cuts contributed to most sectors from agriculture to mining shrinking, data showed this week.
The rating agency downwardly revised its real GDP growth forecast for 2023 to 1% from 1.5% previously, and said it expects growth to average 1.7% in 2024-2026. Real GDP growth was 2% in 2022, S&P said.
"Downside risks to this forecast remain prominent since South Africa has been unable to fully capitalize on the global upswing in commodity prices while continued electricity shortages signal a potentially difficult winter ahead," it said.
S&P affirmed South Africa's 'BB-/B' foreign currency sovereign credit ratings, but warned that it could lower them if the government's ongoing reforms to address the power crisis do not progress as planned.
The country's National Treasury said it acknowledged S&P's decision and reiterated its commitment to reduce rolling power cuts, which have plagued households and businesses for well over a decade in Africa's most industrialized economy.