After celebrating the removal of Zuma as president, we are now struggling through an awfully long and dark night. At time of writing our currency is trading at a 2-year low of R15,34 to the dollar (after touching R15,70); we are in a recession; the equity market is down; the property market is down; the petrol price is sky-high; we are expecting inflation to start creeping up; buildings are going up in flames; and children are being kidnapped.
We are all aware of the suffering of a lot of people in these difficult times and we are weighed down by the stress. Most of us draw back into some sort of protective mode and so we should. When you are in the midst of a violent storm at sea, there is very little you can do about the weather conditions. Instead, you have to focus on what you can do and that is to keep the ship from capsizing.
Currently, we have little control over much of what we are experiencing. South Africa is classified as an emerging economy, just like Turkey, Russia, Argentina, China, Brazil, and a few others. If something goes wrong in any one of these emerging economies, the whole group is affected.
At the moment, both Turkey and Argentina are in a hardly believable mess. Turkey has an inflation rate of 15%; their lira has dropped 20% against the US$; their credit rating is junk; their stock market is down 11% over the last 12 months; and their president is basically a dictator. Argentina has an interest rate of 60%; inflation is north of 30%; their currency is down 30% against the US$; and their stock market is down more than 17%.
If we compare South Africa to these two countries, we are not doing all that badly. Our stock market is down only 4% year to date; our inflation is still under 6%; our local credit rating is still investment grade; our prime interest rate is 10%; and yes, our currency is down around 20% against the US$ year to date.
But, we are seeing all the Zuma cronies being removed from the SOEs like Eskom, SAA, SARS, Transnet, NPA, SABC and many more. We have seen the old mining charter thrown out; and we are seeing the Zondo hearings making those old arrogant VIPs sweat.
Perhaps we will see a silver lining to our economy soon.