Pretoria - South Africa’s current account deficit narrowed marginally in the third quarter, said the Reserve Bank.
In its December Quarterly Bulletin released on Monday, the bank said that the current account deficit narrowed to a seasonally adjusted and annualised R230 billion in the third quarter from R235 billion in the second quarter of 2014.
The shortfall in the current account balance narrowed to 6% of Gross Domestic Product (GDP) in the third quarter of the year from a revised shortfall of 6.3% previously.
In the third quarter, exports increased by 3.3% underpinned primarily by higher exports of manufactured and agricultural products.
The physical quantity of mining exports (excluding gold) advanced moderately over the period as increases in the export volumes of diamonds, platinum group metals and coal were offset by a significant reduction in the volume of iron ore exports.
“Even though production in the platinum mining sector recovered notably in the aftermath of the prolonged strike in the first half of 2014, platinum exports still remained below pre-strike levels as full normalisation had not been accomplished,” said the bank in the bulletin.
Increased global demand for coal ahead of the winter season in the northern hemisphere boosted the exports of coal in the third quarter of 2014.
The economy is expected to continue to improve gradually from the strike-inflicted base in the first half of 2014, said Nedbank economists.
“However, considerable downside risks to the economic outlook remain and confidence is still fragile. This will keep growth in domestic demand subdued. Households will remain cautious given pressure on disposable income, rising debt service costs and the weak job market, while general government will probably strive to reduce the fiscal deficit and growth in the public sector wage bill over the medium term.
“Private firms will remain wary of expanding capacity aggressively given the weak economic environment and other structural problems.
The current account deficit should continue to narrow in 2015 as exports improve, provided there are no significant production disruptions due to labour instability or severe power shortages,” said Nedbank. – SAnews.gov.za
