Political scenarios in a time of economic crisis.

Brazil continues to reel from a combined political and economic crisis that saw the country downgraded to junk status by the ratings agencies and its economic growth fall to -4% earlier this year. No one predicted the dramatic downward spiral. Could something similar happen in South Africa? The contextual conditions bear a striking resemblance. While Pravin Gordhan heroically seeks to steady the ship and implement much-needed reforms against an increasingly rogue President, it would be prudent to consider what might happen if he fails. What if SA gets downgraded in December and its economy were to shrink at the rate Brazil’s has? What would the political consequences be? What would policy-makers do? What would happen next?

This report asks the question ‘what if South Africa does a Brazil’? This is not a predication that SA is going to experience a crisis of Brazil proportions. If anything, it is somewhat more likely that she will not. But the chances of a deep economic contraction coupled with a serious political crisis in SA are greater than zero and, in all likelihood, rising – given the series of events since President Zuma’s ‘9/12’ decision to fire Finance Minister Nene. It is, therefore, worth thinking about how such a crisis might play out here.