South Africa's improving economic outlook could result in an upgrade of its junk-rated debt, according to Morgan Stanley. The investment firm highlights that the country's fiscal metrics are showing signs of improvement after years of slow growth.

Positive sentiment has increased following the recent formation of a governing coalition by the African National Congress with business-friendly parties. This marks a significant political shift after the party lost its parliamentary majority for the first time since 1994 in the May 29 election. The coalition is expected to create a more favorable economic environment, potentially boosting investor confidence and fiscal stability.