JOHANNESBURG - South Africa's current account deficit widened to 2.9percent of the gross domestic product (GDP) in the fourth quarter from 2.1percent in the third quarter as the strong rand boosted imports in the period.
The South African Reserve Bank on Tuesday said that the current account deficit increased to R137.5billion in the fourth quarter of 2017 from R99bn in the previous period.
This was the largest current account gap since the first quarter of 2016.
The broadening of the deficit was on the back of the fourth quarter of last year trade dynamics.
The trade account registered a surplus of R74bn in the fourth quarter, down from R92bn in the prior quarter.
Kamilla Kaplan, an economist at Investec, said on the domestic front consumer and business confidence had improved and import growth was expected around 5percent year-on-year.
“We expect the current account deficit to remain within 2 to 4percent of GDP over the next few years, as the Purchasing Managers Index and other global indicators signal further strengthening in international trade conditions,” Kaplan said.
The South African Reserve Bank said that the net flow of capital on South Africa’s financial account amounted to R50.3bn in the fourth quarter, following an inflow of R13.1bn in the previous quarter.
The value of mining exports, which rose slightly in the third quarter, increased significantly by 9percent in the quarter under review as coal boosted export earnings from mineral products.
Elize Kruger, an analyst at NKC African Economics, said the nature of the current account deficit in South Africa was structural and remained a concern over the medium term.