BEIJING -- Chinese credit rating agency Dagong Global on Monday downgraded the credit rating outlook for South Africa from stable to negative.

The country's local and foreign currency sovereign credit ratings remained unchanged at A, the rating agency said.
The agency said the move reflects South Africa's slow economic recovery, climbing government debt and rising capital influx through portfolio investments.

The agency expects the country's economy to continue growing slowly because domestic political disputes have handicapped the implementation of government policies, and sluggish economic growth in its major export destinations have restrained domestic investment and consumption.

The agency forecasts the country's economic growth rate to reach 3.5 percent this year and 3.8 percent next year.
Meanwhile, Dagong said government debt will rise to 43.1 percent of the country's gross domestic product (GDP) over the 2011-2013 period, compared with 37.1 percent in 2010, due to high budget deficits.

The agency said the large quantity of foreign influx since the global financial crisis also added pressure on the country's external risk management and debt payment as its current accounts are frequently in red.

Securities portfolio investments accounted for 80 percent of the country's total foreign capital influx in 2010, according to Dagong.