South Africa’s Q1 GDP likely to have contracted

The central bank of South Africa is in a quandary. The SARB has to ensure that inflation is in check, a tall order in an environment of political turmoil. At the same time, it also has to assure the markets that central bank’s main priority is to maintain price stability.

Meanwhile, the country’s macro data has been disappointing lately. The first quarter GDP data that is due to be released on Wednesday is unlikely to offer any new surprise.

According to the analysts surveyed, the first quarter GDP is likely to contracted slightly, 0.1 percent q/q. This is in sync with the World Bank’s recently lowered 2016 GDP outlook of 0.6 percent. Nonetheless, these projections might also be overly optimistic, said Commerzbank in a research report. If the South African economy slips into recession, the SARB might face a further challenging task. The recent rebound in the South African rand triggered as a fallout of USD's weakness.