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Worker unrest blamed for South Africa downgrade

Friday, January 11, 2013 - 01:12

Jan. 11 - The rand and South African government bonds weakened on Friday after ratings agency Fitch cut the country's credit rating. It said the downgrade was due to weak growth and worker unrest. Joanna Partridge reports.

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South African miners held wildcat strikes for four months last year, which left 50 people dead. The walkouts are still having an effect on the country's economy. Fitch cut South Africa's credit rating by one notch, blaming weak growth, uncertainty about policy and worker unrest. The ratings agency followed similar moves by Moody's and Standard and Poor's late last year. The rand and government bonds weakened after the downgrade. Analyst Mohammed Nalla says it's the latest bad news for investors. SOUNDBITE: Mohammed Nalla, Analyst, saying (English): "It's likely we're going to start seeing selling of South African bonds and outflow which could have a catastrophic impact on the South African economy. We're not there yet, we're not scaremongering, but if we see further downgrades from where we are today, moving us yet another notch lower, we start to look increasingly vunerable." The government said the miners' strikes had cost Africa's largest economy over $1 billion. Economists warn worker unrest and social tensions may put pressure on the government to increase social spending, which would knock economic growth further. And that could mean there are more downgrades to come.

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Worker unrest blamed for South Africa downgrade

Friday, January 11, 2013 - 01:12