A global recession poses immense risks to South Africa's economy and the country will need to be in strong fighting shape.

The recession that followed the 2008/9 financial crisis hit South Africa hard, sparking the spiralling decay of government finances, and corporate profits have never recovered, says business organisation Business Leadership South Africa (BLSA) CEO Busi Mavuso.

"The World Economic Forum met in Davos [last] week and the mood was sombre, faced with the war in Ukraine, global inflation and climate change.

"The green shoots that are springing up now [in South Africa] are owing to things both within our control and outside of it. The global commodity price shock has been a dose of good luck.

“However, through sheer hard work and hard-fought political battles, we have managed to get government expenditure under control and started to convince our creditors we are not as big a risk as we were," she says in her latest weekly newsletter.

Mavuso has spent the last few weeks in the US and she says she was taken aback at the positive sentiment expressed about South Africa.

Large foreign investors still see South Africa as the strongest economy in Africa and the natural conduit for investment on the continent. South Africa's strong financial system is trusted to handle foreign investor exposures, she adds.

"It is unprecedented that the short-term inflation outlook in South Africa is more benign than in the US, which saw prices 6.6% higher in March compared with a year earlier.

"We are also sporting strong fundamental economic indicators, expecting another current account surplus this year thanks to strong global commodity prices which have boosted the value of exports relative to imports. That has boosted government tax receipts which have been beating targets, helping government improve the debt outlook faster than we expected a year ago," Mavuso says.

This positive momentum was noted by ratings agency S&P Global during the past week when it revised its outlook for South Africa’s credit rating from stable to positive.

"It is the first improvement we’ve had in the credit outlook since our ratings began plummeting in 2011, reaching sub-investment grade at the start of the Covid-19 pandemic. We still have a way to go before we claw back into the critical investment grade level, but it is heartening that we are on the right course," she says.

S&P Global also praised the fundamental structural reforms that have been happening. It signalled that faster implementation of these could lead it to a positive ratings change, she adds.

"With the prospect of global recession on the horizon, it is urgent that we redouble our efforts to deliver the structural reforms that are essential to a sustainably improved growth path for our economy. This is the only way we can maintain a positive trajectory despite the darkening global conditions," she emphasises.

South Africa must urgently complete the electricity sector restructuring that is under way and then swiftly resolve the ports and rail capacity issues that plague exporters.

"We must deliver the long-promised infrastructure push. We must ensure both tourists and skilled people can efficiently obtain visas. We must complete the transfer of television signals to digital to open up spectrum for more broadband," she states.

Further supporting global sentiment is South Africa's gradual progress in dealing with those who drove state capture and delivering justice. The arrest during the past week of five executives involved in allegations of corruption at Transnet, including former CEO Siyabonga Gama, was a positive signal.

"Time is running out for those who presided over the hollowing out of our State-owned enterprises. I am confident that we have already put large-scale corruption of the kind we saw in the Zuma years, with billions syphoned into offshore accounts, behind us. We have much more to do to eliminate it at all levels of the private and public sectors but it is important to signal that the age of impunity is over," says Mavuso.

South Africa is making progress, but must redouble its efforts, she states.