Rand barely moves but still firm

The New Age (Western Cape) - - Business - TNA RE­PORTER

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

PIC­TURE: GETTY IM­AGES

FORE­CAST: The coun­try’s cur­rent ac­count deficit widened as an in­creased trade sur­plus was off­set by a larger short­fall.

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