CAPE TOWN - Recent downgrades to the South African economy will not pose an immediate threat to the majority of South Africans.
Jeffery Rob of Econometrix says the country has already suffered several downgrades.
Rob's remarks comes after Fitch Ratings agency downgraded South Africa's long-term debt to junk status. This rating was followed by that of Standard & Poor's on Friday, while Moody's placed the country on review for a downgrade.
"Interest rates will rise, but the majority of South Africans cannot expect any surprises," said Rob.
Rob said that it will take years for the country to restore its economic stability and it will be a very difficult to do that.
Annabel Bishop, a chief economist at Investec said, "If South Africa remains on its current trajectory it is likely to lose its Moody’s investment grade ratings by the end of the first half of next year should the ANC elective conference outcome be negatively perceived by the markets and the February 2018 Budget not prove credit stable".
Standard & Poor's said "economic decisions in recent years have largely focused on the distribution - rather than the growth of national income. As a consequence, South Africa's economy has stagnated and external competitiveness has eroded. We expect that offsetting fiscal measures will be proposed in the forthcoming 2018 budget in February next year, but these may be insufficient to stabilize public finances in the near term, contrary to our previous expectations".
- BUSINESS REPORT ONLINE