SA current account deficit narrows

SOUTH Africa’s current account deficit narrowed more than expected in the fourth quarter of last year to its lowest in nearly six years, helped by a surge in mining exports after a rise in global commodity prices, the South African Reserve Bank (Sarb) said yesterday.

The rand extended gains against the dollar in response to the data, rising 0.5% to hit a session high of R12.62 to the dollar.

Data from Statistics South Africa showed headline consumer inflation slowed to 6.3% year on year in February from 6.6% in January.

The Sarb said the current account deficit narrowed to 1.7% of gross domestic product (GDP) in the last three months of 2016 from a revised shortfall of 3.8% in the third quarter.

The country last recorded a 1.7% current account deficit in the first quarter of 2011, the bank said.

Economists surveyed had expected a 3.5% deficit for the final quarter.

“Following a brief contraction in the third quarter of 2016, the value of mining exports rebounded strongly in the fourth quarter, largely due to an increase in export earnings of mineral products, mainly iron ore and coal,” the bank said.

Exports rose 3.7% in value terms during the quarter, resulting in a trade surplus of R56 billion from a revised deficit of R7bn in the third quarter.

For the year, the current account deficit narrowed to 3.3% of GDP from 4.4% in 2015.