Fin24

Current account deficit swells

2012-06-21 10:56

Johannesburg - The deficit on South Africa's current account widened to 4.9% of gross domestic product (GDP) in the first quarter, its biggest in more than three years, mainly because of higher net dividend payments to offshore investors in the quarter.

In its June Quarterly Bulletin which reports on data from the first quarter, the South African Reserve Bank said on Thursday the shortfall on the current account had expanded from 3.6% in the previous quarter.

A stronger rand and lower domestic supply had led to smaller export proceeds over the first quarter.

The value of export earnings contracted by 2.4% in the first quarter compared to a 6.4% expansion in the fourth quarter of last year as prices fell in tandem with a 0.4% contraction in volumes, which were hampered by lower demand and domestic supply constraints, especially in the mining sector.

Merchandise imports nudged up 0.3% in value and the price of imports declined due to lower inflation in the trading countries and a firmer rand in South Africa.

The Reserve Bank said the pace of foreign portfolio capital inflows increased in the first three months of the year compared to the last quarter of 2011, resulting in R50.5bn of flows compared to R19.9bn in the fourth quarter.

The bank said the gap in the current account continued to be adequately funded by foreign inflows.