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JOHANNESBURG - South Africa’s current account deficit widened to 2.9% of gross domestic product (GDP) in the first quarter of 2019, from a 2.2% shortfall in the fourth quarter of the previous year, central bank data showed on Thursday.

The quarterly deficit came in slightly below the 3.05% of GDP forecast by economists surveyed by Reuters.

The quarterly trade balance narrowed to 43 billion rand ($2.89 billion) from 71.8 billion rand in the three months to the end of December.

Africa’s most advanced economy relies on foreign portfolio inflows to finance gaping current account and budget deficits that have widened in recent years as tax revenues and fixed investments shrink.

Weak domestic growth and trade uncertainty globally have mainly been to blame.

GDP contracted by a larger than expected 3.2% in the first quarter, data showed this week, as power cuts over the period battered mining and manufacturing, suggesting the country will struggle to achieve annual growth above 1%.

Recent economic figures have shown activity remains subdued and is unlikely to increase substantially in the remainder of the year as power supply from cash-strapped utility Eskom remains a key constraint.

“The deterioration in the trade balance came about as the value of merchandise exports decreased more than that of imports,” the Reserve Bank said in a statement.

The wider current account deficit was mainly due to a “small widening in the deficits of the services and current transfer accounts, whereas the deficit of the income account remained almost unchanged”, the bank said. 

REUTERS / BUSINESS REPORT ONLINE