Today, June 3, is D-Day for the publication by Standard & Poor’s (S&P’s) of its much-anticipated ratings review of South Africa, which, at BBB– and on negative watch, stands precariously close to junk.

In fact, some argue a downgrade is already factored in, pointing to the weakening of the rand, the widening of credit default swaps and lower bank equities as evidence of South Africa’s de facto subinvestment-grade status.

However, at least one economist has warned that the downgrade is only partially priced in and that the event itself could well be sufficient to trigger a job-shedding recession, which would otherwise have been avoided (albeit only barely) in its absence.

Standard Bank chief economist Goolam Ballim argues that, should the country be junked, the economy is likely to shrink by 0.3% this year and shed another 200 000 precious jobs.

He, therefore, describes as inaccurate arguments that the downgrade is already fully reflected, arguing that it is still mostly confined to financial markets, with the real economy likely to feel the effects only after the downgrade. “Financial markets tend to convulse prior to the downgrade, while the real economy smashes afterwards.”

In other words, while many in business may already be experiencing the cold winds associated with the economy’s dismal growth performance that has generated such anxiety among the ratings agencies, those gusts could turn gale force in the immediate aftermath of a downgrade.

That’s not to say that the economy will entirely collapse in a post-junk era. It won’t. In fact, some even argue that a downgrade could provide the necessary shock to ensure that the authorities begin implementing the kinds of fundamental reforms required to alter the course of an economy that has been underperforming for far too long.

However, there is no question that being junked could come with far more economic and social pain than such commentators are currently anticipating.

Arguably, the worst-case scenario would be one where the political elite take being junked as a signal that South Africa is justified in turning its back on fiscal consolidation. It could be argued that such a stance has been not only painful and unwarranted in the context of South Africa’s poverty, unemployment and inequality problems, but also ineffectual.

Rectitude could make way for populism. While the downgrade could even be used as an excuse to rid the country of those individuals (read Pravin Gordhan and his National Treasury officials) whose attempts to stave off junk fell short of the mark. They should, thus, be replaced with better people better “qualified” to deal with South Africa’s prevailing socioeconomic plight.

Such a reaction – while unlikely to play out in the extreme case sketched above – would deepen the economic malaise; put paid to nascent efforts between the social partners to craft a new economic compact; and would considerably lengthen South Africa junk sentence.

By contrast, a reprieve by S&P’s today could shore up the position of the fiscally responsible, galvanise financial markets and act as a stimulus to the real economy.

That said, even in the case of a stay of execution, South Africans would still need to work tremendously hard to sustain the economy’s investment-grade status against the prevailing backdrop of weak growth, dismal confidence and rising political uncertainty. To be sure, any hint that impediments are being placed in the way of growth-supportive reforms will result in that reprieve being very short lived indeed.