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Market Brief - Africa Economic Financial Brief 04-08 November 2013


In October 2013 both Zambia and Ghana received downgrades from the global ratings agency Fitch. Both countries were downgraded from B-plus to B as a result of growing and persistent deficits and. The Zambian authorities expect a deficit of 8.5 percent of GDP in 2013, against an expected target deficit of 4.5 percent of GDP, and an average of 3 percent between 2006 and 2011[1]. South Africa is in an equally difficult position with frequent strikes in its bellwether mining and auto sectors dampening growth prospects while pullbacks in unsecured lending have shaved-off consumer spending. These developments have placed South Africa on the verge of sovereign rating downgrades and the exclusion of its bond market from the Citibank global bond index. These downgrades are bound to hike-up sovereign borrowing costs for these countries and signal contagion and/or negative rating spillover effects.

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