South Africa Update

The Reserve Bank’s Quarterly Bulletin for 3Q 2016 will be published today at 8:00am London time. It is likely to show that the current account deficit in that quarter widened to an annualized 3.4% of GDP, according to our estimates, from 3.1% of GDP in 2Q 2016. The median consensus estimate, according to Bloomberg, is 3.6% of GDP. Industrial production volumes in October were down 1.3% mom (in seasonally adjusted terms), having been up a revised 0.7% mom in September and 0.1% mom in August, according to our analysis. Volumes on a three-month moving average basis in October were down month on month and up only 0.1% year on year, with this growth rate having turned positive in June following eight consecutive months of decline.

 ? The manufacturing sector, which accounts for an estimated 56% of the industrial sector, recorded a decline of 1.9% mom in volumes in October, according to data published yesterday. Volumes were up month on month in September by 1.3% and down 1.0% in August.

 ? The mining sector, which accounts for an estimated 34% of the industrial sector, recorded a decline of 1.2% mom in volumes in October, according to data published yesterday. Volumes were down month on month in September by a revised 0.1% but up in August by 2.4%.

? The electricity sector, which accounts for an estimated 10% of the industrial sector, recorded positive growth of 1.5% mom in volumes in October, according to data published on 1 December. Volumes were down month on month in September. Real GDP growth in 4Q 2016 looks likely to have remained below 1% qoq annualized, according to our preliminary estimates. There are downside risks to the Reserve Bank’s and National Treasury’s real GDP growth forecasts of 0.4% yoy and 0.5% for 2016, in our view. October data for the domestic trade sector – retail sales, wholesale sales and motor trade sales – will be published in the week of 12 December.