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Euromonitor International’s South Africa Economy, Finance and Trade Country Briefing, focuses on Sub-Saharan Africa’s most industrialised economy that is currently experiencing economic and political mayhem. The nation’s sovereign status was downgraded to ‘junk’ by the credit rating agencies Standard & Poor’s (S&P) and Fitch in April 2017, which could lead to heightened capital outflows, reduced investor confidence, job cuts and depreciation of the rand. In addition, risks resulting from a potential China hard landing could potentially slowdown South Africa’s economic growth. Euromonitor International forecasts South Africa’s real GDP to grow at a sluggish pace of 0.9% in 2017.
South Africa is struggling to cope with the negative outcome of the ongoing political turmoil. President Zuma’s last cabinet reshuffling move of replacing Pravin Gordhan with Malusi Gigaba received major criticism leading to the status downgrade. This has caused unprecedented panic amongst foreign investors, who are already withdrawing or seeking to pull out their investments from the South African economy. This in turn, will lead to a rise in borrowing costs and weakening of the rand; thereby adversely impacting public finances and limiting spending on infrastructure projects. All this would put further downward pressure on an already decelerating real GDP growth rate; thereby worsening the country’s economic situation that could even prompt a recession.