South African growth surprised on the downside in the third quarter, contracting by an annualized rate of 0.6%, significantly worse than the consensus estimate of a 0.1% expansion. The setback suggests that annual growth for 2019 will come in at under 1% and fail to keep pace with population growth. This is in keeping with recent trends – South Africa’s GDP expanded just 0.8% in 2018 – and the African National Congress government must now plan for possibility of a ratings downgrade, which risks triggering a downward spiral in public finances.