What happens to economies when downgraded (It doesn't look good for SA)

Just days after President Jacob Zuma fired his Minister of Finance Pravin Gordhan, credit ratings agency Standard & Poor’s has downgraded South Africa to junk status.

Standard Bank Chief Economist, Goolam Ballim, explains what international economies have experienced following the downgrade, and what is likely to happen in South Africa.

Ballim says the financial system and economy is founded on trust, and President Jacob Zuma has broken it by removing Pravin Gordhan as Finance Minister.

He says new Finance Minister Malusi Gigaba is "given a role that is far greater than his shoulders can bear".

Economies slip into recession shortly after downgrade.

Goolam Ballim, chief economist at Standard Bank

Growth trajectory over the near term typically slipped by 2% each points.

Goolam Ballim, chief economist at Standard Bank

Job shedding increases. Those who were able to retain their jobs experienced slower income growth. It effectively meant over the near to medium term slower income growth resulted in weaker wealth generation.

Goolam Ballim, chief economist at Standard Bank

Over time wealth creation, whether through pension fund or investment in the stock market directly, people in South Africa are going to be poor.

Goolam Ballim, chief economist at Standard Bank

Listen to the audio below for more analysis...


Recommended

by NEWSROOM AI

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
ANC MPs shouldn't wait for opposition to act against Zuma - SACP

ANC MPs shouldn't wait for opposition to act against Zuma - SACP

The ANC's alliance partner says ANC members of Parliament should institute a motion of no confidence against President Jacob Zuma.

SA junk status is treason against the poor- economist

SA junk status is treason against the poor- economist

International rating agency, Standard & Poor’s, has downgraded South Africa's credit rating to junk status.

‘Treasury [the new team] doesn’t acknowledge that we have a problem’

‘Treasury [the new team] doesn’t acknowledge that we have a problem’

Arabile Gumede interviews KPMG Senior Economist Christie Viljoen.

South Africa downgraded to junk status

South Africa downgraded to junk status

The rating change by Standard & Poor;s follows the announcement of President Zuma's Cabinet reshuffle

S&P reshuffles South Africa's credit rating to junk

S&P reshuffles South Africa's credit rating to junk

The rating agency says the decision was taken on the back of political and institutional uncertainty.

Moyane: I have a good relationship with Minister Gigaba

Moyane: I have a good relationship with Minister Gigaba

Sars Commissioner Tom Moyane announced that the revenue service collected R1.14 trillion in tax for the 2016/2017 financial year.

Cosatu, ANC Top 6 locked in meetings to discuss recalling Zuma

Cosatu, ANC Top 6 locked in meetings to discuss recalling Zuma

Three of the top 6 ANC members have publicly criticised President's decision to reshuffle Cabinet and SACP wants him to step down.

No need to fear downgrade yet - economist

No need to fear downgrade yet - economist

Thabi Leoka comments on how Cabinet reshuffle will affect SA's credit ratings with Moody's review looming.

LISTEN: The moment of great renewal is upon South Africa - Ramaphosa

LISTEN: The moment of great renewal is upon South Africa - Ramaphosa

The ANC is expected to hold its first National Working Committee since the President reshuffled his Cabinet.

ANC veterans to push for national dialogue - Wally Serote

ANC veterans to push for national dialogue - Wally Serote

ANC veteran Wally Serote says they are looking to meet with NGO's to determine a way forward.

Opinion: Cyril Ramaphosa must quit Cabinet and mobilise from the outside

Opinion: Cyril Ramaphosa must quit Cabinet and mobilise from the outside

Xolani Gwala gives his view on the legitimacy of the new cabinet and questions Deputy President Cyril Ramaphosa's role.

The battle lines have been drawn  - Karima Brown

The battle lines have been drawn - Karima Brown

Monday will be the first time that ANC leaders meet after the President made sweeping changes to Cabinet.

Gordhan: Ratings agencies could take a dim view on SA

Gordhan: Ratings agencies could take a dim view on SA

Gordhan spoke to Bruce Whitfield on Friday, saying there is a lot of work to be done to inspire confidence in foreign investors.

"It would have been nice to receive a phonecall" - Gordhan

"It would have been nice to receive a phonecall" - Gordhan

Former Finance Minister speaks to Bruce Whitfield about how he heard his services were no longer required.

Pityana: We have the wrong person at the helm

Pityana: We have the wrong person at the helm

Save SA convener Sipho Pityana says South Africa is in trouble.

Gordhan rubbishes intelligence report and is applauded by Treasury staff

Gordhan rubbishes intelligence report and is applauded by Treasury staff

Former Finance Minister addressed media and Treasury staff at a media briefing following them being removed from his post.

WATCH: Axed Finance Minister briefs media post Cabinet reshuffle

WATCH: Axed Finance Minister briefs media post Cabinet reshuffle

President Jacob Zuma has fired Pravin Gordhan

Opinion: Eusebius McKaiser on #Cabinetreshuffle not based on merit

Opinion: Eusebius McKaiser on #Cabinetreshuffle not based on merit

Eusebius McKaiser says Faith Muthambi and Bathabile Dlamini are evidence that the Cabinet reshuffle was not about merit.

South Africa is finally in the hands of the Gupta's - Mbuyiseni Ndlozi EFF

South Africa is finally in the hands of the Gupta's - Mbuyiseni Ndlozi EFF

National spokesperson of the EFF, Mbuyiseni Ndlozi, says the EFF rejects cabinet reshuffle by President Zuma.

'Gigaba and his deputy have zero knowledge of how Treasury works'

'Gigaba and his deputy have zero knowledge of how Treasury works'

Economist, Dr Iraj Abedian, says the changes are the biggest since 1996.

'Treasury runs a world-class operation'

'Treasury runs a world-class operation'

The Money Show’s Bruce Whitfield interviews Investec CEO Stephen Koseff and Standard Bank joint-CEO Sim Tshabalala.

Investor roadshows key to presenting 'united front' in SA, says Bonang Mohale

Investor roadshows key to presenting 'united front' in SA, says Bonang Mohale

Finance Minister Pravin Gordhan was called back from Treasury's investor roadshow and Bonang Mohale explains its importance.

Budget speech lacked polices promoting economic growth - FNB economist

Budget speech lacked polices promoting economic growth - FNB economist

‎Economist at FNB South Africa, Mamello Matikinca, says it's clearly very difficult for government to narrow the fiscal deficit.

Popular articles
Personal finance guru Maya Fischer-French comes clean about her own finances

Personal finance guru Maya Fischer-French comes clean about her own finances

Bruce Whitfield interviews Fischer-French about her attitude to money (hopes and fears, successes and failures, etc.).

Madiba’s private secretary Zelda la Grange opens up about money (hers and his)

Madiba’s private secretary Zelda la Grange opens up about money (hers and his)

Bruce Whitfield interviews La Grange about her and Madiba's attitude to money (hopes and fears, successes and failures, etc.)

How to make money through ‘buy-to-let’ (using very little of your own money)

How to make money through ‘buy-to-let’ (using very little of your own money)

Bruce Whitfield interviews Francois Janse van Rensburg, author of “Making Money through Buy-To-Let in South Africa".

Retirement: 8 biggest mistakes people typically make…

Retirement: 8 biggest mistakes people typically make…

The Money Show’s Bruce Whitfield interviews Galileo Capital Financial Advisor Warren Ingram.

[LISTEN] Father shares how he shot the man who raped his daughter

[LISTEN] Father shares how he shot the man who raped his daughter

Johannesburg father, Chris says he had just come back from work when he walked in on an employee raping his 17 year old daughter.

UPDATE: Chilling WhatsApp from Marli van Breda's ex-boyfriend read out in court

UPDATE: Chilling WhatsApp from Marli van Breda's ex-boyfriend read out in court

Marli van Breda's ex took the stand in the trial of triple murder accused Henri van Breda.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...

Blesserfinder: Matching you with a sugar daddy near you

Blesserfinder: Matching you with a sugar daddy near you

Is social trend Blesserfinder, where girls are allegedly matching up with rich 'benefactors' in exchange for sex, a real thing?

Meet Errol Musk - father of Elon, the most innovative entrepreneur of our age

Meet Errol Musk - father of Elon, the most innovative entrepreneur of our age

Elon Musk, as you’d expect, hails from an exceptional family. Bruce Whitfield interviews his Capetonian father.