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Economist warns that nuclear deal will downgrade South Africa’s economy to junk

Nuclear deal might push SA into junk Things aren’t looking up for Africa’s second largest economy, with markets on edge awaiting the country’s budget speech, on February 24.
February 19, 2016 This is according to Busisiwe Radebe, an economist at Nedbank Limited, who addressed a group of local business people at the Ebotse Golf and Country Estate clubhouse recently.

She painted a slightly grim picture of the coming year for South Africa (SA) and its potential effects on local businesses.

Radebe spoke at the latest networking breakfast of the Ebotse Captains of Industry, which is organised by the Ekurhuleni Business Initiative (EBI).

The EBI was founded and is run by Chris van Biljon, who also resides in the Rynfield country estate and expressed his excitement at welcoming Radebe.

Among other concerns, Radebe raised the subjects of a looming credit ratings downgrade, the weaker-than-ever national currency and the repercussions of China’s slowing economic growth.…….Credit rating agencies measure and determine the credit reliability and, with it, the investment grade of companies and countries across the globe.

Standard and Poor’s (SnP), Moody’s Investors Service and Fitch Ratings are the three most influential, with the largest global market share.Currently, SA is rated by Fitch and SnP as only one level above junk status, which is essentially regarded as below investment grade.

“We have many investors who hold SA debt; if we’re downgraded to junk, they have to divest from us and sell our debt, which will weaken the Rand quite a bit and could have dire consequences for the economy,” said Radebe.

According to her, the big national budget deficit is another reason to be wary of the “big three”.

“We are at a scary point in the South African economy,” Radebe said.

“I think if the nuclear deal goes through, we will be downgraded to junk, because we can’t afford it at the moment…….. http://benonicitytimes.co.za/245690/nuclear-deal-might-push-sa-into-junk/

February 22, 2016 - Posted by Christina Macpherson | business and costs, South Africa