South Africa stands to lose five years of potential economic output due to the shock from the coronavirus pandemic and measures to curb its spread, according to the Reserve Bank.

While growth is forecast to recover to 3.8% next year and 2.9% in 2022, GDP will still be smaller than the levels recorded in 2018 and 2019, Alex Smith, the Bank’s lead economist for the financial stability department, said in a presentation on Wednesday.

But let me also say South African banks are not immune to making losses, they are not immune to collapsing

This means the nation’s households and businesses will come under strain, with asset growth and profitability in the finance sector likely to be threatened, he said.

More resilient

While South Africa banks are on average more resilient than their global counterparts, most are likely to report losses in the next year or two, Kuben Naidoo, Reserve Bank deputy governor and also head of the Prudential Authority, which regulates lenders, said on the same call.

“But let me also say South African banks are not immune to making losses, they are not immune to collapsing.”