Pretoria - South Africa's current account deficit widened further to 4.9% of Gross Domestic Product (GDP) in the first quarter of 2012, said the Reserve Bank on Thursday.
"The deficit on the current account of the balance of payments widened from 3.6% of gross domestic product in the fourth quarter of 2011 to 4.9% in the first quarter of 2012," said the central bank in its June Quarterly Bulletin.
The bank noted the stronger rand and a contraction in export proceeds over the period in the first quarter.
"The size of the trade deficit was exacerbated by a further deterioration in South Africa's terms of trade, as declining commodity prices adversely affected South Africa's export earnings," noted the bank.
Additionally, the value of merchandise exports contracted by 2.4% in the first quarter, largely reflecting a decrease in export prices alongside a marginal contraction in merchandise export volumes.
According to the Bulletin, merchandise imports increased by 0.3% in the first quarter of 2012 following a sharp increase of 10.5% in the fourth quarter.
"The marginal increase in the value of imports in the opening months of 2012 followed an exceptionally strong increase in all major import categories in the preceding quarter. The pace of increase in the volume of imported goods moderated over the period, whereas the rand price of merchandise imports declined due to relatively subdued inflation in South Africa's main trading-partner countries coupled with the appreciation in the exchange value of the rand."
The current account gap was being financed by foreign capital inflows.
"This negative imbalance continued to be financed through a combination of net foreign direct investment, portfolio and other investment-related foreign capital inflows."
