Pretoria - The deficit of the country's current account of the balance of payments has narrowed, the South African Reserve Bank (SARB) said on Thursday.
"As a result, the negative imbalance on the current account of the balance of payments improved from 7 percent of gross domestic product in the first quarter of 2009 to 3.2 percent in the second quarter," said the Reserve Bank in the September quarterly bulletin.
The current account is the difference between a country's imports and exports of goods. It also includes the payment of services and income received or paid to foreigners.
The Reserve Bank attributed this to the trade balance coming into a surplus for the second quarter.
"South Africa's trade balance, which had registered deficits since the third quarter of 2005, consequently switched from a deficit of R53.2 billion in the first quarter of 2009 to a surplus of R26.6 billion in the second quarter," the SARB said.
Imports of especially machinery and electrical equipment and cars receded strongly in the second quarter.
Additionally the import of intermediate and consumer goods also tapered off, said the bank.
"Overall, the volume of imported goods shrank for the third consecutive quarter, declining by 15.5 percent in the second quarter of 2009."
The central bank said that the volume of merchandise imports decreased from 24.4 percent in the first quarter of the year to 21.4 percent in the second quarter which is significantly lower that the recent peak of 28.1 percent that was recorded in the third quarter of 2008.
The bank said that the balance on the financial account as a percentage of the country's gross domestic product decreased to 4.6 percent in the second quarter of 2009 from 6.1 percent in the first quarter.
On foreign direct investment into the country the bank said: "Foreign direct investment into South Africa recorded a substantial capital inflow of R23.9 billion in the second quarter of 2009, compared with an inflow of R11.7 billion in the first quarter."
Meanwhile, gross savings as a percentage of gross domestic product rose from a 15 percent low in the third quarter of 2008 to 16.5 percent in the second quarter of 2009.
"The improvement in the saving performance can be attributed to stronger growth in the gross saving of the private sector relative to gross domestic product. A lack of business and consumer confidence, a reduction in household wealth due to the collapse in asset prices and subdued economic conditions partly explained the lower spending on consumer and capital goods."