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Fitch: Ramaphosa's reforms likely to have 'modest' impact on South Africa growth

Jacob Zuma's resignation as South African president reduces the risk of "policy paralysis" in the country, but uncertainty persists over whether his successor, Cyril Ramaphosa, will be able to implement measures aimed at significantly improving economic growth and fiscal policy, Fitch Ratings said.

The rating agency said Ramaphosa's arrival may support economic recovery following recent years of depressed business confidence and growth under Zuma. However, passing more substantial reforms could be challenging for the newly elected president, and the impact on growth of measures he has promised would be relatively modest.

"It remains uncertain whether an improvement in general policy-making and a sustained improvement in confidence would be sufficient to raise trend growth substantially," said Fitch, which maintained its real GDP growth forecast for South Africa at 1.6% for 2018 and 2.0% for 2019.

Fitch also warned that continuing divisions within Ramaphosa's ruling party, the African National Congress, and preparations for the 2019 parliamentary elections could also affect policy making this year.

Growing pressure on the government to address inequality will also complicate the efforts to curb rising government debt, Fitch said.