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SA’s current account deficit widens
CNBC Africa is joined by Nthabiseng Molemoeng, Head of the Balance of Payments Unit, SARB for this discussion.
Thu, 07 Mar 2024 10:54:18 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Import of crude oil and refined petroleum products led to a significant increase in the current account deficit
- Consistent trends of widening trade deficits driven by imports of machinery equipment and high dividend payments in various sectors
- Missed opportunities in fully benefiting from favorable iron ore prices due to logistics issues and exporters using alternative ports
South Africa's current account deficit has widened significantly, surging from R165.5 billion to R166 billion, equivalent to 2.3% of GDP. Nthabiseng Molemoeng, Head of the Balance of Payments Unit at the South African Reserve Bank (SARB), shed light on the factors contributing to this increase. The trade surplus narrowed as the country imported more goods than it exported. Crude oil and refined petroleum products were among the major imports, while exports saw a slight increase, particularly in manufacturing products like chemical products, food, and beverages. The reopening of a refinery led to an increase in crude oil imports for power generation and gas turbine use. Looking at the broader picture, the trend of widening trade deficits has been consistent, with a focus on imported machinery equipment, batteries, electric accumulators, and solar panels. Recent upticks in refined petroleum imports indicate a continuation of this trend, illustrating an ongoing economic and production journey reflected in the numbers. The services and income account also showed a widened shortfall, with increased transport services for inbound tourists and high dividend payments across various sectors contributing to the income deficit. Despite favorable iron ore prices driven by global demand, South Africa has missed opportunities to fully benefit from its terms of trade due to factors like logistics issues and exporters opting for alternative ports like Maputo, Mozambique. While the country navigates these challenges, the hope remains for a turnaround in the balance of accounts. It is evident that adjustments are being made, but the road ahead may still be challenging.
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