Recession a possibility - experts

Some experts warn the credit downgrade by S&P Global has put the possibility of a recession back on the table for South Africa.

FILE: Picture: sxc.hu.

CAPE TOWN - Some experts warn the credit downgrade by S&P Global has put the possibility of a recession back on the table for South Africa.

The credit ratings agency announced its decision to place the country on sub-investment grade on Monday.

S&P Global says the changes in the executive leadership, including the removal of Pravin Gordhan, pose risks to the country’s policies.

In light of the downgrade, Economist Azar Jammine says an economic recession is now a distinct possibility.

“There’s a change that we might end up with negative growth next year if we’re not careful.”

Analyst Christie Viljoen says although possible, it is too soon to tell.

“We still need to see how business and consumer confidence reacts to this and the political situation is still changing. So we definitely haven’t seen the end of this shock.”

Market analyst George Glynos says there is a broader discussion needed around the causes of weak economic growth.

“The most important is the ideological standpoint of the ruling party and how government policy ultimately gets decided and run. That’s the more pressing problem at the moment.”

The South African Reserve Bank estimates growth of 1.7% in 2018.

(Edited by Zamangwane Shange)