S&P's downgrade will tip South Africa into job-shedding recession, bank economist warns

A downgrade of South Africa’s credit rating to junk was currently only partially priced in, a leading bank economist warned on Monday, arguing that a negative assessment by Standard & Poor’s (S&P’s) on June 3 would most probably trigger a recession and precipitate the shedding on around 200 000 more jobs. In fact, Standard Bank chief economist Goolam Ballim described as “inaccurate” arguments that the downgrade was already fully reflected in the weaker rand, wider credit default swaps and lower equities. The prospect of being junked, he countered, was still mostly confined to financial markets with the real economy likely to feel the effects only after the downgrade.