Africa’s most industrialised country, South Africa, has struggled to sail economically this year. The country’s economy is balancing on the brink of a recession after it recorded a contraction of 1.2 percent in the first quarter of the year.

The mining sector has experienced a fall in commodity prices by 18 percent, at a period of rising production costs, while agricultural output has declined drastically. In June, Fitch Ratings affirmed triple B minus rating, which is one notch above sub-investment grade, and a stable outlook for South Africa. While Standard & Poor’s kept its rating one notch above ‘junk’ status.

The government has struggled to restore investor and business confidence following a series of scandals, mismanagement of funds and political issues which have questioned President Jacob Zuma’s competency and commitment to fiscal prudence. The Minister of Finance, Pravin Gordhan, has been accused of authorising the establishment of a special spy unit and is alleged to have acted illegally in setting up the unit during his time as the head of the national tax agency.

However, Gordhan has refused to appear before the Hawks, a special police investigative unit, and has described the allegation as “wholly unfounded.” In a statement, Gordhan said he had been advised that he was under no compulsion to present himself to the police as he’d already provided the unit with a comprehensive account of all matters concerning the National Research Group. Gordhan, who had served as the country’s Finance Minister from May 2009 to May 2014, was reinstated by President Jacob Zuma after the removal of Nhlanhla Nene and David Van Rooyen in the space of a week, last December.

Financial analysts fear that the arrest of the Finance Minister portrays him as Zuma’s puppet, as this could lead to a second removal by the President and could affect investors’ confidence in the South African economy. “His arrest would shatter investor confidence, risk a sovereign ratings downgrade and be a disaster for the already fragile zero growth, zero jobs economy in South Africa”, said David Maynier of the opposition party, the Democratic Alliance.

In an open letter to President Zuma by Business Leadership, the leaders said that the Hawks’ investigation lacks legitimacy and credibility. It read, “It is shocking that our national collective effort to avoid a ratings downgrade and to restore inclusive economic growth is now being so insidiously subverted.”

On Wednesday, Gordhan said that the domestic growth outlook remained bleak. The International Monetary Fund and South African Central Bank have a forecast growth of 0.6 percent for the year. The unemployment rate was 26.7 percent in the first quarter; the highest in at least eight years, and estimates reveal that the unemployment rate will remain around 25 percent this year. With the current state of matters evolving, the hope of the nation not experiencing a recession this second quarter is slim.

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