Cape Town – South Africa’s current account deficit has increased to a range of about 5.5% of the Gross Domestic Product (GDP) over the past two years.
This is according the National Treasury’s Medium Term Budget Policy Statement (MTBPS) - dubbed the mini budget - which was tabled in Parliament by Finance Minister Nhlanhla Nene on Wednesday.
The deterioration of the current account of the balance of payments was attributed to a rising trade deficit that widened to -2.2% in 2013. The trade deficit is projected to widen to -2.4% of the GDP in 2014.
“Global investment appetite for South African assets has remained strong, supported by the broader exposure to the region provided by many local firms. Monetary conditions in advanced economies have also sustained capital inflows,” the National Treasury said.
Wealth of opportunities for SA firms in Sub-Saharan Africa
According to the MTBPS, while declining commodity prices in South Africa’s traditional export market – the European Union – has put pressure on exports, other opportunities are emerging.
Trade and financial links with Sub-Saharan Africa have grown and South African firms are well positioned to expand to the continent.
“The global re-balancing of growth also provides opportunities for South Africa to broaden beyond its traditional reliance on minerals, metal and agricultural commodities to manufactured exports with greater value addition, supported by the more competitive exchange,” the National Treasury said.
The National Treasury’s projection comes at the back of an increased interest by European markets to invest in Sub-Saharan Africa.
The European House-Ambrosetti, one of Europe’s major think tanks, recently told Italian and South African CEOs in Cape Town that the region had untapped potential in the energy, manufacturing and agribusiness sectors that could spike the region’s exports to desirable levels.
The African Union Commission recently identified regional integration as a key to unlock growth on the continent.
The International Monetary Fund (IMF) forecasts economic growth to remain above the 5% region. – SAnews.gov.za
