Current account gap narrows to 4-year low in Q3

South Africa's current account deficit inched lower to 3.2 percent of GDP in the third quarter of 2009, aided by improving exports as massive global stimulus packages lift international trade.

The central bank said on Thursday the shortfall narrowed, in line with expectations, from an upwardly revised 3.4 percent in the previous quarter to its lowest level in more than four years, measuring R77.4 billion despite a slight increase in service, income and transfer payments.

The trade account showed a second consecutive surplus at R21.1 billion.

"With the global economy showing signs of recovery, South African export volumes edged higher while the upward trend in international prices of gold, platinum and other export commodities gave further support to exports revenues," the Reserve Bank said in its latest quarterly bulletin.

The deficit on the current account has been one of the biggest weights of the rand currency and economy as a whole over the past three years, peaking at close to 9 percent last year.

The narrowing this year, partly on lower imports due to weak economic conditions and strained consumers, has helped the rand rally more than 20 percent against major currencies.

The central bank also said the financial account surplus increased slightly to R30.4 billion in the third quarter in spite of a R10 billion outflow in "unrecorded transactions".

Strong investor appetite for emerging market risk kept up interest into local portfolio investment, although at R26.3 billion the net inflow was down on the R29.7 billion from the second quarter.

"The rising trend in prices of securities and international commodities underpinned international investors' appetite towards investment in emerging market economies during the third quarter of 2009," it said.

South Africa's stock market has climbed 25 percent this year. - Reuters


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