South Africa's C/A deficit to underscore vulnerability

Q1 current account (C/A) data and the GDP expenditure breakdown will be in focus when Quarterly Bulletin will be released by the South African Reserve Bank (SARB) on 18 June.

Despite weaker oil prices in Q1, a limited C/A improvement is expected, highlighting South Africa's dependence on portfolio flows for deficit financing, according to Standard Chartered. Fitch (BBB, negative outlook) and S&P (BBB-, stable outlook) highlighted the C/A deficit as a vulnerability in their June rating affirmations. 

SARB trade data, which is based on ownership, typically reflects a more favourable position than the higher-frequency monthly trade data. 

Standard Chartered estimates a 4.8% of GDP deficit (consensus: 5.1%; Q4-2014: 5.1%), and states, a poor underlying trade performance and income balance in Q1 should underscore South Africa's ongoing vulnerability to a capital-flow reversal.