Before a deal was reached late on Thursday, finance minister Pravin Gordhan said SA would not escape unscathed from an escalated European crisis, although its exposure to countries in the current turmoil is reasonably low.

EU leaders agreed to a bail-out package of à109-billion for Greece and a temporary, orderly Greek default.

According to John Cairns, currency strategist at Rand Merchant Bank, the bailout is comprehensive, sensible and better than anyone had expected. He said that while it does not resolve long-term solvency problems in Greece or other EU states, it removes immediate risks. Risks of a complete blow-out of the rand would also dissipate, he said.

"It is important to know that this week's bailout is very temporary," said Chris Hart, economist at Investment Solutions.

Gordhan said that, as a small, open economy, SA would be hit by trouble in Europe and analysts agreed.

"We cannot avoid a fallout (in Europe). We are no longer an isolated island, we are part of the global village," said Ian Cruickshanks, head of treasury strategic research at Nedbank Capital.

"But there has not been a failure as such and it has been shown that the European community cannot allow any member to fail, because if it does the risk is that the sovereign debt held by the banking sector would be written down close to zero, closing down their new business potential and strangling the economy.

"(A sovereign default) will not happen, that has been demonstrated with this bailout package and the actions of the US Fed and the Bank of England who have all pumped money into the system to ensure that there is not a domino effect on the banking sector like there was after the collapse of Lehman Brothers."

Cruickshanks said that as the EU accounted for 35% of SA's international trade, a scenario of failures in the EU - which he did not expect - would lead to a fall in imports from SA.

"In such a scenario we would find our trade account going into a deficit, and that would negatively affect the current account and then risk the currency being downgraded.

"If the EU rescue package was not there we'd have severe trade problems, which would mean severe current-account problems and would have very negative long-term ripple effects."

Gill Marcus, the governor of the Reserve Bank, said at Thursday's interest rate announcement - where rates were kept unchanged - that as long as the sovereign debt crisis was unresolved, confidence would not be restored and periodic bouts of risk aversion could contribute to a high degree of volatility in financial markets.

The Reserve Bank and the treasury were discussing options to protect SA's banking system, she said.

"The challenge in the nature of the crisis in the eurozone is that it can be triggered by a number of things and it can take different forms.

"The best scenario would be no disorderly default."

Marcus said even if Europe and the US solved their debt problems, they faced a long period of recovery and difficult economic times.

"This is heightening the risk issues and we as a country need to pay attention to just how grave the situation is."

Ulrich Joubert, an economist at Kruger International, said the current stimulus and possible lifting of the debt ceiling in the US, as well as the return to fiscal discipline the Europe, would eventually mean lower economic growth, which would continue to affect SA's exports.

This could be exacerbated by the underlying risks in the Chinese economy and possible overheating of the country's property market, he said.

The message from the problems in the EU and US is that SA has no choice but to keep its fiscal house in order.

"The most recent budget led to some alarm bells if the money spent on public sector wages and social grants is considered compared to the money spent on fixed investment," Joubert said.

"For a country like SA to retain or improve its credit rating, long-term risks like rising public sector wages and social grants should be brought under control and the emphasis should be on investing."

Cruickshanks said with a sovereign debt-to-GDP ratio of about 35% SA is not over-indebted relative to the size of the economy. Greece was hopelessly over-indebted with a ratio of 130%, which caused the market to stop lending it money.

"SA is seen as a well-managed economy with strong monetary and fiscal discipline, therefore we will continue to attract funding," he said.

Hart said investors would continue to be attracted to SA. "The only problems are the own-goals that SA scores, like the strikes and the nationalisation debate," he said.