Consumer Goods Council of South Africa (CGCSA) Statement on Fitch Downgrading South Africa
The Consumer Goods Council of South Africa (CGCSA) is not entirely surprised by the decision announced today, 7 April 2017, by Fitch to downgrade South Africa, coming as it does, a few days after Standard & Poor’s downgraded South Africa to junk status. Moody’s has also announced a review pending downgrade of South Africa. Gareth Ackerman, co-chairman of the CGCSA says the latest move by Fitch merely reinforces the extent of the economic crisis facing South Africa, which was exacerbated by the Cabinet reshuffle.
“As we have already said before, the reshuffle was an irrational and ill-thought decision that has plunged South Africa into a crisis from which it may take several years to recover at a time when we need policy and political certainty, as well as inclusive growth which will result in much needed jobs,” Ackerman says. “Fitch’s decision will further worsen the expected negative economic environment which our members will face. This also includes the distinct prospect of rising inflation and prices, which will affect consumers who are already struggling to balance household budgets. In turn, this will reduce spending and directly impact on our members’ businesses.”
Ackerman says Fitch, S&P and Moody’s have all highlighted the possibility of the government weakening its resolve to fiscal consolidation and implementing policies to address the country’s economic and social problems. “The CGCSA is similarly concerned that political expediency has taken over rational economic thinking at a time when the country needs committed political leadership to implement sustainable and investor friendly policies,” Ackerman says.
He says the CGCSA hopes the government will demonstrate more willingness to not only engage with the business sector, but importantly consider suggestions from organised business to deal with the country’s economic crisis. “Our members, who between them contribute over R508 billion to GDP, are ready and willing to partner with the government to drive economic growth. But this can only be achieved in an environment of mutual trust, respect and transparency,” says Ackerman.