Faced with very low economic growth and increasing government debt, the next South African government will face significant challenges, especially as the ruling African National Congress (ANC) party will emerge politically weakened from the May 29 general election. However, a financial crisis remains unlikely in the short term thanks to important risk-mitigating features characterizing the country's economy. In recent years, South Africa's economic performance has deteriorated significantly relative to its own past growth and the growth of regional peers. As a consequence, socioeconomic indicators like employment rates, crime rates and access to education have worsened. The government has remained largely unable to combat this socioeconomic decline via fiscal stimulus due to rising government debt, which puts downward pressure on sovereign credit quality. Although the government has increased social spending to address socioeconomic demands, this spending adds to the country's debt load, which further precludes the government's ability to use longer-term...
