South African current account deficit likely widened in Q4 2015

South Africa's SARB's March Quarterly Bulletin (QB) is due to be released today. One of the important area of the QB is the national accounts that details the demand-side GDP data. The production-side GDP data that was released last week indicated that growth remained subdued at 0.6% q/q saar in Q4 2015. This was mainly due to manufacturing sector underperforming and the impact of the drought on agriculture. Meanwhile, balance of payments is another important area of the QB.

"We expect the data to show a widening in the current account deficit to 5.7% of GDP in the final quarter of 2015 from a shortfall of 4.1% (of GDP) in Q3. This would confirm the full year CA deficit at 4.4% of GDP", says Barclays.

The forecast is based on the already released monthly data for trade from SARS that indicates that the trade deficit widened to ZAR71.9bn in Q4 15 from ZAR37.2bn in Q3. The current account deficit is not expected to shrink further in 2016 amidst strong capital equipment imports and the likely agricultural crop imports given the severe drought. Hence, South Africa's current account deficit is expected to remain at about 4.6% of GDP in 2016.