South Africa’s current account deficit widened to a slightly worse than expected –4.9 percent of GDP in the first quarter from –3.6 percent in the last quarter of 2011, the June Quarterly Bulletin (QB) of the SA Reserve Bank (SARB) released on Thursday shows.
The deficit came on the back of a deterioration in the trade account of the balance of payments, which widened to R42.1-billion in the first quarter from a deficit of R17.1-billion the quarter before, as well as a simultaneous increase in the shortfall on the service, income and current transfer account with the rest of the world.
A survey of nine leading economists by I-Net Bridge had forecast a current account deficit of –4.5 percent of GDP. The forecast range for the expected deficit varied from -5.3 percent to -4.0 percent of GDP.
A current account deficit occurs when a country's imports of goods, services and transfers is greater than its exports of goods, services and transfers.
The current account deficit for 2011 as a whole was -3.3 percent of GDP.
The shortfall on the services, income and current transfer account with the rest of the world widened by about R17-billion in the first quarter, culminating in a deficit of R110.5-billion.
The larger deficit mainly reflected an increase of almost 40 percent in gross dividend payments to non-resident investors, originating predominantly from companies listed on the JSE.
The dividend declarations were preceded by what the Reserve Bank referred to as a gust of exceptionally good profit announcements, in particular by the banking sector.
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