South Africa’s current account deficit widened as expected to 4,1% of gross domestic product (GDP) in the third quarter from 3,1% in the second quarter, the Reserve Bank’s quarterly bulletin showed on Tuesday.
SA imported more than it exported and also paid more dividends to international investors for their investments in SA than it received for its investments in the rest of the world, resulting in the current account shortfall widening.
Imports remained resilient, partly on higher demand and a weak rand driving prices up, while growth in exports slowed sharply amid continued sluggish global demand. Mining exports increased while manufactured goods exports declined.
The government’s multi-billion rand infrastructure programme supported transport equipment imports.
The bank also reported an increase in fertiliser imports. SA is in planting season, which can partly explain the rise in fertiliser imports.
“Over and above the acquisition of two aircraft, imports of vehicles and transport equipment were also bolstered by the importation of locomotives as part of government’s national infrastructure development programme,” the Bank says.
The current account deficit shows that SA must still work harder to lift exports and access new export markets and that local companies should invest more globally. It also shows that while a weak rand is marginally helping to lift exports, it has not deterred the strong growth in imports even though it makes imports more expensive.
By Ntsakisi Maswanganyi for www.bdlive.co.za