Rand barely moves but still firm
SOUTH Africa’s current account deficit widened to 2.4% of GDP in the second quarter as an increased trade surplus was offset by a larger shortfall on services, income and current transfer payments, the Reserve Bank said yesterday.
The overall deficit was wider than forecast by economists surveyed by Reuters, who had expected it to match the first quarter figure of 2%. The rand was barely moved by the data, trading 0.19% firmer at 13.12/$ early yesterday.
A rise in the value of exported gold and merchandise goods helped widen the trade surplus to R65bn from R57bn in the first quarter, the Reserve Bank said in its September quarterly bulletin.
The services, income and current transfer account deficit widened to 3.8% from 3.3%, it said. Transfers rose on a 42% year-on-year increase to R14bn in the amount South Africa paid to its trading partners in the Southern African Customs Union (Sacu).
In February, the Treasury had budgeted for Sacu payments of R56bn for the 201718 fiscal year, up 42% from 201617.
The net income deficit widened as both dividend payments to non-resident investors and dividend receipts from abroad fell, the bank said.
Export growth has outpaced import growth.
These trade dynamics are expected to persist in the coming quarters as high frequency global indicators, such as PMIs and global trade, confirm the strengthening of the global synchronised recovery, aiding SA’s export performance.
On the domestic front, import growth is expected to remain suppressed amid depressed consumer and business confidence and the economy is not expected to record more than 0.5% y/y growth in 2017. – with Reuters
FORECAST: The country’s current account deficit widened as an increased trade surplus was offset by a larger shortfall.