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Tough times ahead for SA's economy

Economy
Durban - The economy was top of mind countrywide this week after President Jacob Zuma unleashed chaos by firing finance minister Pravin Gordhan.

Economist Dawie Roodt said tough times lay ahead and the poor quality of government was to blame.

“It will be a positive surprise for us this week if Zuma gets voted out. The rand will roar and there will be a chance of recovery for the economy. The week ahead will tell us a lot. Zuma has played his last card and his head is on the block now.”

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File photo: 'It will be a positive surprise for us this week if Zuma gets voted out.'

South Africa would be downgraded, Roodt said, but it wouldn’t be “the end of the world”. Ratings agency Moody’s is to release a scheduled review on Friday.

He said South Africans shouldn’t panic. “We have a set of rules and a constitution to protect us. If Zuma isn’t voted out, we will just have to deal with two more years of incompetence before we can find our feet again. Eventually, we will get rid of him,” said Roodt.

Azar Jammine of Econometrix said the country’s confidence had been knocked. “I’m certain we will be downgraded to junk status. The rand hasn’t depreciated as badly as expected, which is a good sign. The axing of former finance minister, Nhlanhla Nene, impacted the rand far worse. South Africans needed to be careful and smart with their finances. There are tough times ahead,” said Jammine.

Chris Malikane, an economics professor at Wits University, agreed there was no way to avoid a downgrade as rating agencies had spoken about political instability as the reason for it.

“The only thing that was holding us from this was Pravin Gordhan. It will be volatile for the next few months but I think we will be okay. South Africans must get real. Even if Gordhan was still around, the economy would still be suffering. Unless we dismantle white monopoly capital domination, there is no future for South Africa. We need to go back to reimplementing our Freedom Charter,” said Malikane.

Economist Professor Bonke Dumisa said it was not all doom and gloom and that everything that had happened was within the constitution. Dumisa did not believe that South Africa was going in the direction of a downgrade and said the term “downgrade” was being used to scare the nation.

“We need to give the new finance minister space to breathe and do his job. He needs to prove himself and the only way he can do this is if he gets the support of the people of this country. The manner in which things have been done leaves a lot to be desired.”

He said it was a positive sign that the February current account deficit grew smaller, a signal of good funds management which was attractive to investors.

Economists generally agreed it was also a positive sign when the rand strengthened after ANC secretary-general Gwede Mantashe and Deputy President Cyril Ramaphosa agreed that Zuma’s recent actions were questionable.

Sunday Tribune

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