Strikes push up South Africa’s external payments deficit: bank

South Africa’s current account deficit jumped to 6.2 percent of output in the second quarter, on the back of prolonged strikes and declining export volumes, the central bank said on Tuesday.

The bank said that inward investment helped to offset slightly the damage to exports arising from a five-month strike in the platinum mines and a fall in production in the automotive sector.

The national payments account of transfers into and out of a country, is an important measure of a country’s ability to pay its way and can affect the value of its currency.

The bank said in a statement “the current account deficit widened substantially to 6.2 percent of gross domestic product in the second quarter of 2014, from 4.5 per cent in the first quarter of the year.”

Economists had forecast a deficit of 5.6 percent.

South Africa’s economy which is battling poor growth, lower than growth in other countries in the region, is battered by high inflation, which breached the bank’s 6.0-percent target in June, and by a double-digit unemployment rate.

Lower export volumes were affected by low demand from trading patterns in Asian countries, including India, China, Thailand and Malaysia, the bank said.

The South African economy, the most advanced in Africa, had shrunk in the first quarter of the year by 0.6 percent, against the background of the mining strike which halted platinum production for five months.

“Against a background of industrial action and strife, growth in real fixed capital expenditure decelerated abruptly in the second quarter of 2014 to a barely positive rate of increase,” the bank said in a statement.