Current account likely to show improvement

SA’s current account is likely to have improved in the second quarter after a contraction in the first quarter, data from the Reserve Bank are expected to show this week.

On Thursday, the Bank will release its quarterly bulletin for the second quarter of 2017, and economists expect the current deficit to narrow slightly.

First National Bank economist Mamello Matikinca said: “Import compression, slightly better export growth and consecutive trade surpluses are likely to be partially offset by higher current transfers.

“The terms of trade have likely already peaked, and a recovery in domestic consumption is expected to result in a mild acceleration in imports.”

On Tuesday, credit ratings agency Moody’s will host its annual sub-Saharan Africa summit in Johannesburg.

In June, Moody’s cut the local and foreign currency assessments to one level above junk, citing risks to growth and fiscal strength.

Moody’s GM for Africa Sylvia Chahonyo said: “This landmark event will assess the shifting financial and economic themes that are likely to shape credit conditions over the next 12 to 18 months.”

On Wednesday, RMB and the Bureau of Economic Research will release the business confidence index. Business confidence has been depressed since the Cabinet reshuffle and has largely been linked to the heightened policy uncertainty, particularly leading up to the ANC elective conference in December.

Investec economist Kamilla Kaplan said: “Depressed business confidence reflects the perception that economic weakness will be prolonged and increases the risk that pessimism will become entrenched, further delaying a recovery to fast, job-creating economic growth.”

Statistics SA will release the July retail trade sales on Wednesday. The numbers are expected to show how the sector performed at the start of the third quarter after a strong performance in the second.

Matikinca said: “Household consumption has been holding up despite the difficult economic conditions and it is likely that retail sales will register another month of positive single-digit growth.”

Investec expects retail sales to reflect growth of 2.7% year on year, while Trading Economics forecasts growth of 2.4%.

Bloomberg Intelligence analyst Mark Bohlund said: “A 5% dip in petrol prices, with effect from July 5, should have given retail sales a push, though increases in August and September mean this stimulus is likely to have been short-lived.”

On Thursday, Stats SA will release the wholesale and motor trade sales for July.