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Current account deficit seen widening

Jun 18 2012 13:01

Johannesburg - South Africa’s current account deficit is likely to have swollen to 4.5% of GDP in the first quarter of this year from 3.6% the previous quarter, a Reuters poll showed.

The 10 economists surveyed forecast that the deficit, due to be reported on Thursday, will have widened due mainly to reduced exports to Europe - South Africa’s largest trading partner - which is struggling on through a debt crisis.

“We are looking for quite a significantly wider trade deficit on the quarter, largely on the back of a deteriorating trade balance,” said Jeffrey Schultz, macro strategist at Absa Capital.

Fourteen economists saw inflation in Africa’s biggest economy, due out on Wednesday, braking to 5.95% in May, just below the top of the Reserve Bank’s 3% - 6% target band, from 6.10% the previous month.

On a month-on-month basis, the pace of rise in consumer prices is forecast unchanged at 0.4% in May.

CPI has been posting lower prints in recent months, in line with central bank predictions, and inflation looks likely to average around 6.0% for the second quarter, especially with relatively few price categories analysed in May.

“May is a low survey month, so the main drivers are likely to be food and fuel prices,” said Elize Kruger, economist at Kadd Capital.

current account deficit  |  sa economy  |  gdp


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