Pretoria - South Africa's current account deficit in the first quarter of 2011 widened to 3.1 percent.
The Reserve Bank's Quarterly Bulletin, released on Tuesday, showed that the deficit widened from a revised 1 percent (which was previously 0.6 percent) of gross domestic product in the fourth quarter of 2010 to 3.1 percent.
The 3.1 percent is attributable to the value of exports that levelled off in response to weaker international demand for domestically produced goods, whereas an expansion of gross domestic expenditure contributed to an increase in the value of merchandise imports.
"These developments compressed the surplus on the trade account from 2.7 percent of gross domestic product in the fourth quarter of 2010 to 0.8 percent in the first quarter of 2011," noted the report.
A current account deficit happens when a country's imports of goods and services is superior to its exports of goods and services. Earlier this week, analysts had expected the deficit to reach -2.9 percent.
"We expect the current account deficit to have widened sharply to 2.9 percent of GDP from 0.6 percent in the final quarter of last year, mainly pushed by a large trade deficit recorded during the period," Nedbank economists said on Monday.
According to the bulletin, the deficit on the services, income and current transfer account of the balance of payments widened by R6.8 billion to R109.8 billion in the first quarter of this year.
"This larger deficit resulted mainly from increased net investment-income payments to non-resident investors which, due to its relative size, materially affect the balance on the services account."
Dividend payments to non-resident investors were approximately 20 percent higher in the first quarter of 2011 when compared with the corresponding period in 2010.
"This firm growth largely reflected positive profit announcements by domestic companies as the economic recovery proceeded," said the report.
