Pretoria - South Africa’s current account deficit narrowed from 6.5% in the fourth quarter of 2012 to 5.8% gross domestic product in the first quarter of 2013, said the Reserve Bank on Wednesday.
Consistent with the pick-up in world economic activity, global trade volumes gained further momentum in the first quarter of 2013.
“With the value of merchandise exports advancing at a slightly firmer pace compared to merchandise imports, the trade deficit narrowed from R86.1 billion in the fourth quarter of 2012 to R78.2 billion in the first quarter of 2013,” said the central bank of its June Quarterly Bulletin.
The shortfall on the services, income and current transfer account with the rest of the world, which had remained broadly unchanged since the second quarter of 2012, improved markedly in the first quarter of 2013, supporting the improvement in the trade balance.
“Consequently, the deficit on the current account of the balance of payments narrowed from R212.6 billion in the fourth quarter of 2012 to R190.9 billion in the first quarter of 2013. As a ratio of the country’s gross domestic product, the deficit came to 5.8 percent in the first quarter of 2013, noticeably lower than the 6.5 percent registered in the preceding quarter,” said the Reserve Bank.
According to the bulletin the volume of mining and manufactured goods exported from South Africa increased in the first quarter of 2013.
“At the same time, the export earnings of South African producers continued to benefit from the lower exchange value of the rand which extended into the first quarter of 2013. As a result, the value of merchandise exports advanced by 11.9 % to R800.1 billion in the first quarter of 2013, up from R715 billion in the fourth quarter of 2012,” said the bank.
Some analysts had expected the deficit to have risen sharply.
Standard Bank earlier today said that it expected the current account deficit narrowing to -6.2%.
Nedbank said the narrow deficit was encouraging.
“Although the narrower current account deficit is encouraging, the shortfall still remains large and the rand is still vulnerable. The balance of payments will remain under pressure in 2013. Trade performance will remain lacklustre as long as the global environment remains unfavourable. More domestic production disruptions, mainly labour strikes, would add to the weak external trade account,” said the bank.
It further added that general economic conditions remain weak.
“Today's numbers confirm that general economic conditions remain weak, with significant downside risks. Risks to the inflation outlook remain high due to further weakness of the rand. We expect the Reserve Bank to continue striking a balance between weak growth and rising inflation by maintain its accommodative monetary policy stance well into 2014,” noted Nedbank. – SAnews.gov.za
