SA RECORDS LARGEST CURRENT ACCOUNT SURPLUS ON RECORD

JOHANNESBURG - South Africa's current account balance widened to its largest surplus ever at R343 billion for the second quarter, according to data released by the SA Reserve Bank (Sarb) yesterday.

The current account balance is considered an indicator of an economy's health. It is the difference between credits - incomes and receipts - and debits - imports and payments.

The current account balance, in monetary terms, was R261 billion in the first quarter. As a ratio of GDP, the surplus widened from 4.3 percent in the first quarter to 5.6 percent in the second quarter.

The Bureau for Economic Research (BER) had expected the surplus to be greater than five percent. A survey by FNB economists revealed expectations for a surplus of 7.1 percent of GDP.

Similarly, Investec economist Kamilla Kaplan noted that forecasts were for a surplus of seven percent of GDP, this mainly off the back of a larger surplus on the trade account.

According to the Reserve Bank, merchandise exports increased to a "new all-time high" during the second quarter. Merchandise includes agriculture, mining and manufacturing exports. Imports increased by 3.4 percent, its second highest level since the second quarter of 2019.

Stats SA reported this week that on a quarter-on-quarter basis, exports lifted four percent, linked to the increase in trade of mineral products, precious metals and stones - as well as vehicles and transport equipment. The commodities boom has been helping bolster the trade account, Fin24 previously reported.

The Sarb noted that the trade surplus widened to a record high of R614 billion in the second quarter of 2021, up from R451 billion in the first quarter.

The higher value of exports however is linked to price increases rather than volumes. "The widening to a record high of the trade surplus in the second quarter was due to the increase in value of merchandise exports, especially mining exports," the Sarb said.

These commodities include pearls, precious and semi-precious stones, and precious metals - particularly platinum group metals, driven by higher rand prices for rhodium. The Sarb also noted increased export prices of coal, and to a certain extent, iron ore.