The global financial crisis is likely to delay South Africa's economic recovery from the weakness of the past few quarters, Standard Bank group chief economist Goolam Ballim said on Tuesday.

"The global travails add an additional layer of challenge," said Ballim.

While the country would ordinarily have recovered from the weakness in its financial health by the middle of 2009, more palpable recovery would now only be apparent well into the latter part of the year, he said.

Ballim said the financial health of the world's largest banks in the United States and Europe was under stress at the moment.

"That is impinging on the functioning of the financial systems in those financial markets. There is likely to be contagion to the rest of the world, including emerging markets.

SA banks well-capitalised

"However, its is extremely unlikely emerging markets' banks will suffer remotely the same fate... South African banks are generally well-capitalised, well-regulated, liquid and importantly, profitable.

"South African banks also have a strong shareholder community and all of these elements effectively mean that individual deposits and savings are reasonably safe."

Ballim said the more "glaring" linkage between the global financial events in South Africa was through the country's exports.

"It is likely that global demand will be weak for a protracted period of time and this will suppress demand for South Africa's export of goods and services."

As a consequence, South Africa's economy would be prone to some slower growth in the coming quarters. This would restrain households' income growth and could also raise the prospect of some job losses.

He said that while the financial market link was not powerful, it was the link to the real economy which could have consequences.

Sapa