World Economy

Zuma likely to stay in power despite South Africa's weak economic outlook: Political analyst

Eustance Huang
'Markets underestimate Zuma's ability to survive'

A string of sweeping changes in South Africa's cabinet by President Jacob Zuma late last month hurt economic confidence and major ratings agencies downgraded the country's sovereign credit rating to "junk" status.

Despite the weak economic outlook, expect Zuma to stay in power, according to political analyst Alastair Newton.

Speaking with CNBC'S "Capital Connection" on Wednesday, the former diplomat said it is likely Zuma will continue holding on to power as president in the foreseeable future.

"I think markets have consistently underestimated Zuma's ability to survive, despite the fact that the [African National Congress] itself is clearly deeply divided, despite the fact that there will be thousands of protesters on the streets today," Newton said.

Emphasizing the low likelihood of Zuma being ousted, Newton said "Zuma still remains very firmly in control. He enjoys dominance of the national executive committee, the ANC, which he has cultivated through patronage, and I think the chances of him being ousted in the short-to-medium term are pretty low."

South African President Jacob Zuma
Christopher Furlong | Getty Images

Commenting on Zuma's claims that the protests mounted against him were "racist" in nature, Newton said there was little reason to believe so as there were protesters of all colors calling on the leader to step down. Newton added, in his view, that this was "a true reflection of a rainbow nation."

Looking ahead, Newton said Zuma was likely to appoint a like-minded successor as head of the ANC at its end-of-year conference, with his former wife Nkosazana Dlamini-Zuma likely to be chosen as successor.

Amid the chaos in the South African government, with multiple finance ministers being replaced over the past three years, the country's economy has struggled.

"The country has clearly been struggling economically for some considerable time. If you look at GDP growth it's been very poor indeed and, certainly, that is even poorer if one puts it alongside the demographics of the country," Newton said.

Echoing the comments of Michael Power, a strategist at Investec Asset Management who had spoken earlier with CNBC's "Street Signs," Newton recommended a wait-and-see approach for current and potential investors in South Africa.

"Things may pick up once Zuma is gone or once we know who his replacement is going to be because markets are very good at dealing with poor situations if they are stable situations," Newton said.

He did, however, offer a silver lining for potential visitors to South Africa.

"With the Rand plummeting, South Africa becomes even more attractive to tourists," Newton said, encouraging more people to consider visiting the country. "It's pretty cheap going down there right now and it still has a wonderful, wonderful, tourist offering."