Finance Minister Malusi Gigaba

Johannesburg, (NNN-SA NEWS) : As Finance Minister Malusi Gigaba prepares to meet the South African government’s economic cluster of departments on Tuesday, the Head of Economics and Business Sciences at the University of the Witwatersrand, Professor Jannie Rossouw, has warned of a deeper recession in the country if investor confidence does not improve, after the latest credit ratings downgrade by international rating agency Moody’s.

Roussouw, who stressed that the country needed some national healing to rebuild confidence and trust eroded by corruption, said Monday: “If the confidence is not there, you don’t get investment; you don’t get economic growth, and you don’t get jobs. So, that has to change. We need confidence.”

The stubborn jobless rate, which has risen to 27.7 per cent, and weak growth has cast a dark shadow over the economy.
More than nine million working-age people are out of work. Businesses and consumers also do not want to spend or do not have money to spend, and the current recession means the economy is actually shrinking.

Moody’s reflected these difficulties when it downgraded the country’s credit risk last Friday to one notch above sub-investment grade. Following the latest downgrade, the government warmed to the idea of a BRICS (Brazil, Russia, India, China and South Africa) ratings agency to ensure what it called a “balanced view” when ratings are made.

However, analysts say that won’t change the dismal picture on the ground.

In its immediate response to the latest grading, the National Treasury pointed to efforts being made to improve governance at State-owned Enterprises (SOEs), progress on concluding various Bills and the National Development Plan to address growth.