Credit ratings agency Fitch has warned South Africa that its credit rating may be lowered following a five-month platinum strike in the country.
Fitch was followed by Standard & Poor who also downgraded their rating
Fitch changed the country’s outlook from stable to negative, citing poor economic prospects and rising public debt.
Its economy contracted by 0.6% in the first quarter, in part because of a fall in platinum production.
However, unions said a platinum miners’ wage deal was on the horizon.
A negative outlook can indicate that a country’s credit rating could be downgraded. A downgrade can influence a country’s borrowing costs, as some investors are restricted from lending to borrowers that do not have a high rating.
The economic contraction in South Africa in the first quarter “partly reflects the long strike in the platinum sector, but manufacturing output also fell sharply”, Fitch said.
