Pretoria - South Africa's current account deficit widened in the first quarter of 2016 as exports slumped despite a recovery in the global prices of commodities and a weaker rand, the central bank said on Tuesday.
The current account deficit widened to 5 percent of gross domestic product in the first quarter from a revised shortfall of 4.6 percent in the final quarter of 2015, the central bank said on Tuesday.
Economists surveyed by Reuters had expected a 4.25 percent gap For the first quarter.
South Africa's rand extended losses against the dollar after the current account data, weakening as much as 1.3 percent to 15.3700 per dollar.
Agriculture, mining and manufacturing led the slowdown in output as a widespread drought and subdued demand for commodities weighed on the productive side of the economy.
“The (commodity) prices of course were not juicy, although they were propped up a bit in rand terms with the exchange rate being relatively weak,” said head of economic reviews and statistics at the central bank Johan van den Heever.
Exports slumped during the quarter, resulting in a trade deficit of R38 billion, ($2.5 billion) compared with a revised R41 billion gap in the fourth quarter, the Reserve Bank said in its June quarterly bulletin.
In its June quarterly bulletin, the Reserve Bank said that spending growth in Africa's most industrialised economy slowed by 1.3 percent in the first quarter as consumers cut down on purchases of big ticket items due to rising interest rates.
“One of the explanations for this rather sharp decline is that previously people were still buying, pre-empting that prices would go up quite a bit,” van den Heever said.
The central bank has raised lending rates by 200 basis points to 7 percent since the beginning of 2014 in a bid to keep inflation within its target band of 3 to 6 percent.
Headline inflation slowed to 6.2 percent in April from a peak of 7 percent in February, although food prices remain elevated because of the drought.
The bank also noted that a sharp decline in gross domestic production, by 1.2 percent in the first quarter, had contributed to the slowdown in spending by both households and government.
REUTERS