Global Courant
South Africa’s current account deficit narrowed more than expected in the first quarter as the value of gold and goods exports increased.
The current account deficit, the broadest measure of trade in goods and services, shrank to 1% of annual gross domestic product, or R66.2 billion, from a revised 2.3% of GDP in the previous quarter , the South African reserve Bank reports this in a statement on Thursday. The average estimate of 12 economists in a Bloomberg survey was for a difference of 2.8% of GDP.
South Africa has now recorded a current account deficit for the fourth consecutive quarter. The central bank in May revised its estimates upward for a current account deficit of 2.5% of GDP in 2023 and 3.1% next year.
The better-than-expected deficit was largely driven by the increase in the annual trade surplus from R34.2 billion in the fourth quarter to R103.2 billion, central bank data shows. The value of gold exports rose to the highest level in nine quarters and the value of goods and services to a record, according to the data.
A smaller deficit in the services, income and current transfer account also contributed to the narrowing of the overall deficit. It shrank to R169.4 billion, from R189.5 billion in the fourth quarter, the central bank said.
The data may support the rand, which has remained volatile due to record blackouts and fears over South Africa’s relations with Russia. Last month, Africa’s most industrialized country was accused by the US of arms trafficking with the sanctioned country, allegations it has denied.
A current account gap and a consolidated budget deficit – the Treasury estimates the latter at 4% of GDP for the current fiscal year – are key risks for South Africa, making the country vulnerable to external shocks.
Read: Government celebrates 0.4% growth
