SA’s population growth is set to largely erase any per capita GDP gains in 2019, according to ratings agency S&P Global.
The global ratings agency, which on Friday kept SA’s sovereign rand and dollar-denominated credit ratings unchanged* at sub-investment grade, was commenting on the state of SA’s economy.
According to Stats SA’s mid-year population estimates for 2018, the country’s current population growth rate is around 1.5% per year.
But S&P is only estimating a GDP growth rate of 0.8% for 2018, slightly higher than the SA Reserve Bank’s latest estimate of 0.6%.
In 2019 and 2020, when both S&P and the central bank expect economic growth rates to pick up to near 2%, per capita GDP increases will largely be cancelled out by population growth, with S&P forecasting growth of “close to 0%”.
“We estimate that among the 20 major emerging markets, only Qatar, Argentina, and Venezuela will show slower per capita growth,” the ratings agency said.
* S&P affirmed SA’s long-term local currency debt at BB+, the first notch of sub-investment grade. It kept the country’s long-term foreign currency rating at BB, two notches below investment grade.