South Africa's economy may contract by between 2% and 4% this year as a result of the coronavirus pandemic, the South African Reserve Bank has said. 

In its latest Monetary Policy Review, the central bank said there was also limited scope for an economic rebound in 2021, with growth unlikely to exceed 1%. 

'Nightmarish'

Speaking on a webcast briefing on Monday afternoon, Reserve Bank Governor Lesetja Kganyago said forecasting had become "nightmarish" given the many moving parts at play.

In its earlier GDP projection in March, the bank said that economic growth was likely to decline by 0.2% this year. But this was before President Cyril Ramaphosa announced a 21-day nationwide lockdown to curtail the spread of the coronavirus so that South Africa's health infrastructure does not become overwhelmed. 

"South Africa was already in recession prior to the Covid-19 shock, and the situation has become more challenging since," it said. 

The Reserve Bank projected that the 21-day shutdown could result in a 2.6% contraction of GDP from the production side of the economy. It also projected about 370 000 job losses and about 1 600 businesses going insolvent. 

"These numbers are uncertain and move around a lot," said Dr Chris Loewald, a member of the Monetary Policy Committee. The outcome also depends on how long it takes for various sectors to pick up after returning to service following the lockdown.