All models are wrong, but some are useful
Fitch ratings agency decided to leave South Africa’s rating unchanged at BBB on Friday evening. It maintained its negative outlook and pointed to the weak GDP growth forecast (which is largely driven by continuing electricity supply constraints) as a key driver. It also cited the heavy reliance on the external funding of the current account deficit as a key risk. South Africa’s reliance on portfolio and debt inflows increases its vulnerability to emerging market uncertainty in the face of a hawkish Fed.