By Ntando Thukwana.
South Africa’s current-account deficit unexpectedly narrowed in the third quarter, reflecting an improvement in the nation’s terms of trade.
The gap on the current account, the broadest measure of trade in goods and services, shrank to 0.7% of gross domestic product — equivalent to 57 billion rand ($3.3 billion) — in the three months through September, compared with a revised 1% in the prior quarter, data released by the central bank on Thursday showed. The latest reading beat the 1.2% median estimate of four economists in a Bloomberg survey.
South Africa’s terms of trade, including gold, improved slightly in the third quarter, while the terms excluding bullion ameliorated at a faster pace as the rand price of exported goods and services increased more than that of incoming shipments, the bank said.
“The narrowing of the current-account deficit mainly resulted from a smaller shortfall on the services, income and current transfer account,” it said.
South Africa’s trade surplus shrank to 178.3 billion rand in the third quarter from 187.2 billion rand in the prior three-month period as the value of imports increased more than exports. The bank cited higher imports of refined petroleum products and crude oil as the main driver in the increase in the value of imported mining products.
The deficit on the services, income and current-transfer account declined to 235.3 billion rand from 259.4 billion rand as the country recorded a smaller shortfall on its primary-income account.
As a percentage of GDP, the shortfall on the services, income and current transfer account narrowed to 3% from 3.4% previously.
South Africa has now posted eight successive current-account deficits — the longest stretch since 2019, according to data compiled by Bloomberg.