Bruce Whitfield: From BRICS to BRATS â€` SA goes from great hope to laughing stock

Source: Business Insider SA, 07/09/2018

• South Africa is not Argentina, Venezuela or Turkey, nor China or
Brazil, whatever the acronyms imply.
• But the world is seeing us as a place with the kind of regulatory
and economic trouble found in some of those countries.
• Still, a currency now a third cheaper than earlier this year has
some positives.

If you’re tired of economic acronyms, blame Jim O’Neill.
He started it all.
The British economist saw common traits in four fast-growing economies
nearly 20 years ago and thought it a good idea to create an acronym:
BRIC for Brazil, Russia, India, and China.
It was never meant to confer an investment status on the group of
countries, but then the exchange-traded-fund industry, and managed
funds, latched on to the theme. Politicians in BRIC countries grabbed
it; it gave them a sense of legitimacy, besides the theme played out
well.
For a while.
At the time emerging markets were on nobody’s’ radar and it was a
useful way to draw attention to a new trend. And it worked. Even if
only really China, and to a lesser extent in recent times India, have
brought anything substantive to the party.
South Africa found itself incorporated into grouping despite the fact
that we shared few of the characteristics that brought the bigger
faster growing partners together.
Since then we have seen lots of people create quite clever acronyms
applicable at a moment in time but essentially worthless to any
serious investor. During the Greek debt crisis we learned about the
PIIGS: Portugal, Italy, Ireland, Greece and Spain â€` all economies with
debt burdens enough to keep the governors of the European Central Bank
awake at night.
There was a time around the Soccer World Cup where South Africa was
finally showing signs of growth, we looked like we might finally reach
our potential and deliver some sustainable growth and create some jobs
to tackle some of the issues that are still with us today. Some smart
alec, a CEO of a global bank, if memory serves, coined CIVETS:
Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa. Since
then Egypt had the Arab spring, Turkey gained what is basically a
dictator, and South Africa very nearly drove itself at full speed into
a brick (sadly not BRIC) wall.
Then there were MINT countries: Mexico, Indonesia, Nigeria, Turkey.
The idea being they would become the powerhouses. Mexico and Indonesia
have seen pockets of performance but Turkey, with its attempts at
manipulating policy that makes the sacking of Nhlanhla Nene seem like
a Sunday school picnic, and Nigeria’s most recent antics around MTN
and harvesting R75 million from the account of Standard Bank’s Nigeria
business Stanbic without so much as a guilty plea, is worrying.
Now finally an acronym worthy of the name, BRATS: Brazil, Russia,
Argentina, Turkey and yes, South Africa.
Brazil is, like neighbour Argentina, filled with promise but fraught
with corruption scandals and economic mismanagement, just as Turkey
and Russia have their various issues. Then there is us. It doesn’t
matter if we don’t see ourselves in such company; the brutal reality
is that this is the way the world sees us right now â€` and that is not
going to help drag us out of recession.
We went into recession this week, as I reported HSBC warned we might a
month ago, so you should have been prepared. The Rand has lost a third
of its value from its strongest point this year to its weakest point
this week. On 26 February the Rand peaked at R11.56/$ and on Thursday
closed at R15.40. That makes you as a global citizen considerably
poorer than you were at the start of the Ramaphosa presidency.
I prefer to see the glass half full.
It makes SA 33% cheaper to invest in too, and critically for the
export industry, 33% more competitive. For tourists too it makes us a
third cheaper â€` if only Malusi Gigaba would get off his high horse on
pointless visa regulations.