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S. Africa Current A/C Deficit Widens
World Economy

S. Africa Current A/C Deficit Widens

South Africa’s current account deficit widened to 4.1% of gross domestic product in the third quarter of 2016 from a revised deficit of 2.9% in the second quarter, the central bank said on Friday.

Exports fell during the quarter, resulting in a trade deficit of four billion rand ($291.5 million) compared with a revised surplus of 48 billion rand in the second quarter, the Reserve Bank said in its December quarterly bulletin, IOL reported.

The bank said the deficit in the current and trade accounts were due to weaker global demand for the country’s goods. “Export earnings were also affected by the strengthening in the exchange value of the rand which more than offset the benefit arising from higher international commodity prices,” the bank said.

The rand extended its losses in response to the data, falling 0.75% to 13.745 per dollar.

The bank said fixed investments by companies decreased for a fourth consecutive quarter, declining 1% after a 6.8% fall in the previous quarter as private businesses in particular cut down on spending.

Africa’s most industrialized economy is struggling to attract investment, with sentiment dimmed by political uncertainty, weak growth that has hit consumer activity, as well as the looming threat of credit downgrades to junk.

On Tuesday, data showed the economy had barely advanced, expanding by 0.2% in the third quarter as manufacturing contracted sharply.

A Reuters poll sees the economy expanding 1.1% next year from a forecast 0.4% growth in 2016, well below the 5% annual growth government is targeting in bid to lower soaring unemployment and a growing budget deficit.

 

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