‘Today’s talk on economy will be the most important since 1994’

The rand has weakened slightly to R15,91 to the dollar ahead of Zuma’s speech.

Picture: Christa Eybers/EWN

JOHANNESBURG - Economists will be closely monitoring the markets during of the president's address this evening, in the hope that the country can avoid a credit rating downgrade to "junk status".

The rand has weakened slightly to R15,91 to the dollar ahead of President Jacob Zuma's speech.

Local and foreign investors will be watching for statements about where the country is going.

Investment Solutions' Chief Economist Lesiba Mothata there's a need for clarity from the president.

"The conversations that are coming out later today, or even in the budget, are the most important since 1994. The markets are looking for whether SA will be able to weather the storm."

Rand Merchant bank's Co-head of Research John Cairns says, "The President and the Finance Minister have been talking up what the government is planning to do in terms of avoiding a ratings downgrade; they are actually going to have to act. I suspect that will be more in the budget than in the State of the Nation Address."

WHAT COULD ZUMA SAY TO RESTORE INVESTOR CONFIDENCE?

Growth is slowing dramatically, interest rates are increasing and people are feeling poorer than they did a year ago.

The problem is, what could the president say and what measures could he announce that would restore confidence in his government's handling of the economy?

Another burning issue is the trust deficit; investors seem to still be concerned about the fallout from the firing of Nhlanhla Nene as they think it hasn't been properly explained.

While the President Zuma is unlikely to mention anything about Nkandla, or any scandal around him, the opposition may.

However, he could try to change the political agenda by making some dramatic announcement that will eat up the headlines.

But this is Zuma's second last State of the Nation Address as leader of the African National Congress and that might make it harder to actually announce anything concrete.

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