South African Current-Account Deficit at 9-Year Low 

(Bloomberg) --

South Africa’s current-account deficit narrowed to a nine-year low in the fourth quarter as outflows decreased.

The shortfall on the current account, the broadest measure of trade in goods and services, shrank to 1.3% of gross domestic product from 3.7% in the previous period, the South African Reserve Bank said in a report released Thursday in Pretoria. That’s the smallest gap since the final three months of 2010. The median estimate of three economists in a Bloomberg survey was for a deficit of 3%.

Key Insights

• The narrower-than-expected gap was mainly driven by an improvement in the shortfall on the nation’s primary-income account, which reflects outflows due to dividends and interest payments to foreign shareholders, and a decline in imports partly because of weak economic activity. The current-account shortfall for 2019 narrowed to 3% of GDP, from 3.5% in the prior year.
• The improvement in the current-account deficit may ease some of the pressure on the rand, which has weakened 8.7% against the dollar this year amid risks associated with the spread of the coronavirus and a deterioration in South Africa’s public finances.
• The trade surplus widened to 102.5 billion rand ($6.7 billion) from a revised 44 billion rand in the three months through September as the of exports increased while imports dropped 2.6% from the previous quarter. For the year, the trade surplus grew to 0.8% of GDP from 0.5% in 2018.

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