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SA not in a crisis - economist

Oct 23 2017 15:31
Carin Smith

Stellenbosch - South Africa is not necessarily in a crisis, according to Lesiba Mothata, executive chief economist at Alexander Forbes Investments.

"Yes we have a problem in South Africa, but it is political."

Mothata emphasised that it is very important to focus on the long term. Alexander Forbes' research shows a lot of people don't stay in the market long enough when it is volatile.

"Yes our economy is weak and it looks like it has reached bottom, but it is not like a Hungarian or Brazilian crises outcome," he said.

"Uncertainty increases when looking ahead and underlying assumptions place a lower likelihood of extreme market events."

Mothata admitted that the tax burden in SA is a problem, but he does not think it is "the end of the world". This is because SA still shows a trade surplus.

"If sub-Sahara Africa does better, SA will participate in that growth," said Mothata.

As to the question whether SA can be seen as a so-called "fallen angel" by investors, he said even if the country ends up being seen as such, it will then offer other investment opportunities.

Countries that are downgraded to junk status are often referred to as "fallen angels".

"SA should take advantage of Africa's growth," he said.

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