Home News South African trade deficit narrows in Q3: official data

South African trade deficit narrows in Q3: official data

Published on 08/12/2014

South Africa's current account deficit narrowed slightly to six percent in the third quarter, the Reserve Bank said Monday as growth remained sluggish, with lower export volumes.

Economists had forecast a 5.8 percent shortfall.

The bank said income shortfall culminated in a narrower deficit on the current account, from 235 billion rand ($20 billion), 6.3 percent of gross domestic product, in the second quarter to 230 billion rand, or 6.0 percent, in the third quarter.

Export volumes rose by less than import volumes over the period, while exports of gold and iron ore also declined as global demand for commodities weakened, the bank said in its Quarterly Bulletin.

The country’s key manufacturing and mining industries are still recovering from lengthy stoppages caused by strikes over wages early this year, which hit production.

After a quarter-to-quarter annualised decline of 4.0 percent in the second quarter of 2014, manufacturing production contracted at a rate of 3.4 percent.

The contraction also put pressure on growth, resulting in a 1.4 percent increase in the third quarter.

One of the country’s top four banks, Nedbank, said the downside risks to the economic outlook and confidence persisted.

It stated that had it not been for the strikes, third quarter growth could have been as high as 3.1 percent.

“The current account deficit should continue to narrow in 2015 as exports improve, provided there are no significant production disruptions due to labour instability or severe power shortages,” Nedbank economists said in a statement to clients.