Pretoria - South Africa’s current account deficit narrowed to 5.1% in the fourth quarter of 2013, said the Reserve Bank on Wednesday.
“The current account deficit improved from 6.4% in the third quarter of 2013 to 5.1% in the fourth quarter. On an annual basis this ratio, however, weakened from 5.2% in 2012 to 5.8% in 2013,” said the central bank in its March Quarterly Bulletin.
The deficit was slightly higher than what was anticipated by analysts.
“This was higher than our forecast of 4.7% and the market consensus of 5.7%,” said Nedbank economists.
For 2013, the deficit stood at 5.8% compared to a 5.2% shortfall in 2012.
The central bank said the improvement in the deficit in the fourth quarter was due to a decrease in the value of merchandise imports, among others.
“The marked improvement in the current-account balance in the fourth quarter of 2013 was mainly due to a substantial decrease in the value of merchandise imports. The value of imported goods receded by R37 billion or by 3.6% in the final quarter of 2013, following an increase of almost 6% in the third quarter,” noted the bulletin.
The trade deficit narrowed to a seasonally adjusted R45 billion in the fourth quarter from R91 billion, totalling R74 billion in 2013.
“The current account deficit is likely to narrow further during this year on the back of improving global conditions. However, any disruptions to domestic production will be negative,” noted Nedbank economists.
Nedbank expects the bank’s Monetary Policy Committee (MPC), which raised the repo rate at its January meeting, to raise the repo rate again later this month.
“The Reserve Bank raised the repo rate in January, prompted by the weaker rand and the risk of high inflation for an extended period. We expect the Monetary Policy Committee to hike interest rates again at the 25 - 27 March meeting and then maintain steady rates until the second half of 2015,” it said. - SAnews.gov.za
