Much has recently been made of reports that Egypt has overtaken South Africa as Africa’s second largest economy and that we have now slipped to third place – with Nigeria in first place. All this has added to South Africa’s sense of national decline – after having prided ourselves for so long as being in an unassailable position as the continent’s largest economy. Commentators must now console South Africans with the reassurance that we are still the most “highly industrialised” economy in Africa.

The relative size of economies is generally measured by assessing their Gross Domestic Products on a PPP (Purchasing Power Parity) basis – which irons out kinks caused by the differences between official exchange rates and the actual purchasing power of the currencies involved.

There is an eerie unreality about the debate that has followed Moody’s decision to retain South Africa’s rating at two notches above junk grade status (with a negative outlook).

Moody’s explained its decision on the basis of three principal considerations:

• South Africa’s economic growth is expected to recover after reaching its trough in 2016 – based on the prospect of closer collaboration between government, business, labour and civil society in restoring confidence in the economy and addressing the constraints to economic growth;
• following the 2016 budget, it is expected that general government debt to GDP will be stabilised under the direction of the Treasury – which has a reassuring fiscal track record; and
• Moody’s was impressed by South Africa’s institutional strength compared to its peers – no doubt a reference to the roles played by the Constitutional Court, the Public Protector and civil society in the recent “spy tapes” and Nkandla judgments, and in the Nene affair.