Pretoria - South Africa's current account deficit widened more-than-expected to -4.6% of GDP in the first quarter partly due to weak exports, the central bank said in its latest quarterly bulletin released on Thursday .
The deficit widened from a 4
½-year low of -2.9% of GDP, more than the -3.6% deficit in a Reuters poll last week, as export volumes fell by 3.3% and were down 1.9% in value terms.
"Although the recent recovery in global economic activity supported the revival in international trade volumes, somewhat weaker macroeconomic conditions in certain euro member countries impeded export volumes," the South African Reserve Bank said in its June quarterly bulletin.
The eurozone is South Africa's biggest trading partner and about a third of domestic exports are headed for that region, where some countries have experienced debt problems, clouding the growth outlook of the region.
"An appreciation in the real effective exchange rate of the rand probably also inhibited the international competitiveness of South African exports," the central bank said.
The rand's exchange value firmed by 3.9% in the first quarter against a basket of 15 currencies of South Africa's most important trading partners.
A recovery in South Africa's economic lifted demand for good produced abroad, with imports rising 2.7% and 3.2% in volume and value terms respectively, pushing the trade account back into a R12.9bn deficit for the quarter, compared with a R24.9bn surplus in Q4.
The central bank also said the deficit on the services, income and current transfer account widened to R103.2bn, from a R96.3bn gap in Q4.
South Africa depends mainly on foreign portfolio flows to fund the current account gap.
The Reserve Bank said "the stable economic environment in the country alongside well-developed and liquid financial markets facilitated a further strong net inflow" of R44.1bn in the first quarter, compared with R41.2bn previously.
- Reuters