S&P Global Ratings warned that South Africa’s unusually weak growth leaves it badly exposed to a Middle East oil price shock, even as it kept the country’s credit ratings unchanged.
Speaking at a conference in Johannesburg on Tuesday, S&P director Ravi Bhatia said South Africa was “really an outlier” among emerging market peers, sitting near the bottom on growth. That weakness, he said, drags on tax revenue and job creation and limits the room to absorb external shocks.
The warning centres on oil. As a net fuel importer, South Africa would feel a sustained price rise quickly, through transport, food, and broader inflation, squeezing households that already face weak incomes and high living costs. Inflation climbed to 4 percent in April from 3.1 percent in March, partly on an 18 percent jump in fuel prices.
S&P forecasts Brent crude near 100 dollars a barrel for the rest of the year and has lifted its 2026 inflation projection for South Africa to about 4.5 percent. It expects the South African Reserve Bank, which has already returned its policy rate to 7 percent, to keep rates high to hold inflation expectations in check.
Tighter policy carries its own cost. Higher rates would weigh on already soft demand, leaving the central bank to balance price stability against growth. The agency noted that South Africa has avoided fuel shortages so far, helped by diversified imports and domestic refining capacity.
Even so, S&P held the country’s ratings steady, at BB for foreign currency debt and BB plus for local debt, citing progress on fiscal reform and efforts to stabilise public finances. It gave no sign of an imminent change to its outlook.
The broader risk is that a prolonged energy shock compounds South Africa’s existing weaknesses. Low investment, infrastructure bottlenecks, and unreliable power already cap its growth, and limited fiscal space leaves little cushion if import costs climb and the recovery stalls.