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Emerging market insights

Is South Africa the next Brazil?

There are stark similarities between the two countries that could well see South Africa track Brazil’s self-induced downward growth spiral.

South Africa bears increasingly striking similarities – in a bad way – to Brazil. Just a few years ago both were considered first-tier emerging market economies personified by their inclusion into the BRICS acronym. The BRICS – Brazil, Russia, India, China and South Africa – were regarded as countries that were leading the way in terms of rising and future consumer demand. This narrative has changed. BRICS is now a two-speed club.

Key takeouts from this report

  • If the status quo in South Africa continues, the economy is likely to face further ratings downgrades with potential for a sharp and severe contraction, Brazil-style.
  •  According to Transparency International’s 2016 Corruption Perception Index, South Africa and Brazil both rank poorly in 64th and 77th position respectively. However, despite Brazil’s dismal ranking, the country’s judicial system at least continues to function.
  • The mismanagement of SOEs has had a dramatic negative impact on both the Brazilian and South African economies due to the systemic nature of corruption bedevilling them.

What our experts say

“Ongoing corruption scandals, political turbulence and extended negative growth were also cited by rating agencies as reasons for Brazil’s sub-investment ratings.”

Call to action

Download the report to see read about the potential future of the South Africa economy

How can Deloitte help

Deloitte’s emerging markets experts can provide further insight into emerging market trends, investment and scenarios.  

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