In recent months, South Africa has been making headlines for all the wrong reasons. Since police shot dead 34 strikers at the Marikana platinum mine on August 16, in perhaps the most shocking incident in the country's post-apartheid history, and which was followed by labour unrest spreading throughout much of South Africa's minerals sector, the country’s image has taken a hammering.
Rating agencies acted quickly. Moody’s downgraded South Africa a notch to Baa1 in late September, while Standard & Poor’s followed suit a few weeks later to leave it rated BBB (one level below Moody’s). Both cited the likelihood of socio-economic stresses worsening because of Marikana and the possibility that the government, which has seen a fiscal surplus in 2008 turn into a deficit of about 4.6% of gross domestic product (GDP) today, will respond with populist measures and a spending splurge.
