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Excessive uncertainty if Zuma had failed to survive - economist

Aug 08 2017 18:41

Cape Town - Should President Jacob Zuma have failed to survive the vote of no confidence, the immediate short term reaction would have been one of excessive uncertainty, according to Terry Stratis, an economist and business consultant.

"Markets would have reacted very negatively until such time as there is a clear plan forward. Instituting a 'care taker' government, would have been highly dependent on the expediency and composition of such a government (again uncertainty would have prevailed here)," he said.

"Even if a new government was voted in, uncertainty would have continued to linger in markets due to the ANC National conference in December."

READ: Zuma said to consider dropping Zwane if he wins vote

If Zuma survived the vote - which actually happened - SA is likely to see a weakening in the rand as well as a negative impact on the country's bonds, in his view.

"Credit rating agencies are likely to view such an event as a negative outlook and would further increase the possibility of further downgrades. Unfortunately, this will solidify the fact that the ANC does not in fact act in a democratic manner within its structures," said Stratis.

"Perceptions around SA's credibility and its ability to control corruption and the clear State capture will re-affirm investors’ fears, thereby pressuring the economy further. The no confidence vote, is a defining moment for SA and for the ANC who has been entrusted by the citizens of the country to act in a bona fide manner and in the best interests of the nation."

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