Ordinary people would be hardest hit if South Africa lost its investment-grade sovereign credit rating. The rating, a view on a country's ability to repay its debt, has far-reaching economic consequences. A downgrade to sub-investment grade, or junk status, would affect poor people acutely. Here's why: • The cost of living would increase. "A downgrade could weaken the rand, which would translate into imported inflation and prompt higher interest rates," said KPMG economist Christie Viljoen. A weak rand would increase "pass-through inflation" on imported goods, said Citadel chief strategist Adrian Saville. "Ordinary South Africans just have to look around their homes to see imported goods, such as smartphones. Many cars are imported, as is fuel." A number of local companies import raw materials to produce goods and services. A weak rand would increase the cost of raw materials, which would in turn increase the cost of production and make certain goods and services more expensive, as ...
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