A dense fog and a misty winding road ahead

with the automatic stabiliser role that I spoke about, subject to data and global policies been more clear and certain.

I know that this does not bring any comfort to any importer, exporter or those planning a holiday in Bali this December.

Globalisation is a complex phenomenon. There are many costs and benefits to this process. Some countries, like the US, when designing their legislation, are extraterritorial.

We don’t like this, but we have to live with it until such time that we amass sufficient global influence to change this behaviour. One of the rules which apply in the US, Europe and Japan is that institutions that invest the funds of those who saved must do so prudently.

And the basic guidelines and frameworks are done through ratings agencies. These institutions must assess a country or corporate’s quality so as to advise investors whether to invest X amount or not. And they do this through a ratings mechanism. A dark cloud, mist or fog is gathering over us as a country. We have just been rated one notch above junk status. We cannot afford to become junk status. Junk status as we know translates automatically to cost of borrowing, re-ordering of corporates on the investor’s horizon within his or her rules or within certain indices like the Morgan Stanley Capital Investment, etc.

The immediate defence mechanism is based on three pillars: a credible fiscal stance (we dare not deviate from the Budget stance we adopted in October, please!), re-enforce central bank independence (I know this is intangible, but let’s do it!) and finally, respect for all other independent institutions (the judiciary, chapter nine institutions, etc.)

Yes, andfinally, we have to demonstrate that we are serious about economic growth and taking serious steps to propel it. A number of steps need to be taken to ignite growth.

I won’t repeat these here, as I spoke about this at some length during my inaugural lecture at the Department of Business and Economics Sciences. I refer you to that material.

PHOTO: REUTERS The writer says he is in favour of a stable exchange rate at whatever level and adds that it is an important automatic stabiliser in any economy with a floating system.

The writer says that Ministers Rob Davies, left, and Ibrahim Patel are mistaken to think that a weaker rand will benefit South Africa’s manufacturing.