S.Africa current account deficit narrows as imports drop - CNBC Africa

S.Africa current account deficit narrows as imports drop

Financial

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The South African Reserve Bank (SARB) said the current account deficit stood at 5.1 per cent of GDP. PHOTO: Getty Images

This is as exports outpaced imports to reduce the shortfall on the trade account in Africa's biggest economy.

In its latest Quarterly Bulletin released on Wednesday, the South African Reserve Bank (SARB) said the current account deficit stood at 5.1 per cent of gross domestic product, its lowest since the start of 2012, when the shortfall was 3.9 per cent.

The figure compared with a revised 6.4 per cent shortfall in the third quarter, and a consensus forecast from economists at 5.7 per cent.

The rand strengthened marginally after the figures, but then retreated to stand at 10.9065 by 0831 GMT, around 0.5 per cent weaker on the day and its softest level in a week.

The bank said exports of cars and transport equipment picked up in the fourth quarter as manufacturers recovered from a strike in the previous three months.

Portfolio inflows reversed in the fourth quarter. The financial account saw outflows totalling 30.8 billion rand, compared with 48.8 billion rand of inflows in the third quarter.

However other investment flows switched from outflows to inflows in the last three months of the year, the bank said.

On an annual basis the current account deficit was wider than in 2012.

Import inflation saw South Africa's terms of trade – the ratio of export prices to import prices - deteriorate in the fourth quarter, the third consecutive quarterly fall.

South Africa's rand hit a string of five-year lows in January this year, pushing up the local price of imports. The value of merchandise imports increased 16 per cent in 2013 compared with the previous year.

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