Bloomberg News

South African Current Account Gap Little Changed at 3.3% of GDP

September 13, 2011

Sept. 13 (Bloomberg) -- South Africa’s current account deficit was little changed in the second quarter as a record gold price helped to boost exports, while oil imports climbed.

The shortfall, the broadest measure of trade in goods and services, widened to 3.3 percent of gross domestic product compared with 3.1 percent in the first quarter, the Reserve Bank said in its Quarterly Bulletin released in Pretoria today.

The current account gap, which the government has referred to as the economy’s “Achilles’ Heel,” has narrowed since 2009 as economic growth stalled, crimping demand for imports. Gold soared 28 percent this year to a record $1,921.15 an ounce on Sept. 6, boosting export earnings, while oil imports climbed as crude prices jumped.

“The balance of payments situation remains one of fairly moderate current account deficits financed comfortably by capital inflows on the financial account,” Monde Mnyande, the central bank’s chief economist, said in a speech in Pretoria today.

Africa’s biggest economy relies on foreign portfolio investment to fund the current account deficit, flows that have fluctuated depending on investors’ appetite for riskier assets. Foreign investment in stocks and bonds increased to 35.1 billion rand ($4.74 billion) in the second quarter from 20.8 billion rand in the previous three months, the central bank said.

Direct investment by foreigners, including takeovers and building of plants, jumped to 12.3 billion rand in the second quarter, the biggest increase in two years, the bank said.

--Editors: Gordon Bell, Paul Richardson

To contact the reporter on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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