Sars said the country's current account deficit widened sharply to R110.5 billion in the second quarter from R91.5bn, or 2% of GDP, in the previous quarter.
The official second-quarter deficit data contrasts with market expectations of a narrowing in the deficit to 1.9percent of GDP.
The tax man said the current transfers deficit rose to R44bn in the quarter under review from R29bn in the first quarter on “an increase in the amount paid to South Africa’s trading-partner countries in the Southern African Customs Union at the commencement of the 2017/18 fiscal year”.
William Jackson, a senior emerging markets economist at Capital Economics, said yesterday that the big picture was that the deficit has narrowed significantly over the past 18 months and second-quarter wider shortfall was unlikely to prevent the Reserve Bank from cutting interest rates again later this year.
“The breakdown of the data showed that South Africa's trade balance remained in a healthy surplus. The widening of the overall current account shortfall was, instead, driven by an increase in the current transfer deficit which, in turn, was due to a rise in government payments,” Jackson said.
In the first half of the year, the current account deficit narrowed to R202bn from R324.2bn in the same period last year.
The services gap increased to R7.2bn from R 4bn in the first quarter, while the income deficit went up to R124.1bn from R116.2bn; and the current transfers gap rose to R43.8bn from R28.7bn.
Meanwhile, the trade balance surplus widened to R64.6bn from R57.4bn in the first quarter.
The widening current account deficit comes on the heels of Sars last week saying that the country’s trade surplus decreased to R8.9bn in July from a downwardly revised R10.5bn surplus in June, as both imports and exports showed significant declines.
However, while the trade surplus slid in July, it still beat market expectations of a surplus of R5.8bn.
Kamilla Kaplan, an economist at Investec, said yesterday that aggregate global demand conditions and commodity prices had strengthened, aiding South Africa's export performance, while weak domestic consumption and investment demand have compressed import growth.
“These trade dynamics are expected to persist as high-frequency global indicators, such as Purchasing Managers Indexes and global trade, confirm the strengthening of the global synchronised recovery,” said Kaplan.
“Import growth is expected to remain suppressed amid depressed consumer and business confidence and the economy is not expected to record more than 0.5% year-on-year growth in 2017.”