Country Economic Forecasts > South Africa

The current account deficit widened from 4.6% of GDP in Q4 2015 to 5% in Q1 this year. The structural current account deficit is one of the key concerns for international investors given South Africa's dependence on foreign portfolio flows to finance the gap. We see the deficit widening from 4.3% of GDP in 2015 to 4.7% this year before narrowing to 4.3% in 2017.Meanwhile, although CPI inflation slowed marginally to 6.1% in May from 6.2% in April, we expect price pressures from food and petrol to intensify during H2 2016, with headline inflation unlikely to fall within the central bank's target band of 3-6% until Q3 2017.And with the outlook for the manufacturing and mining sectors remaining downbeat, due to soft demand from China in particular and low commodity prices, we still expect GDP growth to slow to just 0.3% this year, before recovering to 1.5% in 2017 on the back of a slight rebound in the industrial and manufacturing sectors.