Will South Africa suffer Brazil’s fate?

The main reason why South Africa has not followed Brazil into a deep recession is that the shock to its terms of trade has been less extreme. Our core view is that South Africa faces an extended period of very low growth or stagnation, rather than a spiral into recession. But were it to suffer a further deterioration in its terms of trade, for example from a collapse in precious metals prices, the economy could well be pushed into a Brazil-style crisis.