South Africa recorded its largest recorded capital inflow in 2005, the South African Reserve Bank said in its quarterly bulletin released on Thursday.
”Sound macroeconomic policies in South Africa and continued positive investor sentiment towards emerging markets in general gave rise to sizeable capital inflows in the country in 2005,” the bank said.
The net capital inflow on the financial account of the balance of payments amounted to R98,4-billion in 2005.
In the fourth quarter the net inward movement of capital came to R22,8-billion.
The sizeable inflow was sufficient to finance the shortfall on the current account.
”South Africa’s overall balance of payments accordingly improved to R6,6-billion, registering a sizeable surplus of R34,3-billion on the overall balance of payments in 2005.”
The country’s debt however rose from $46,1-billion at the end of June to $46,8-billion at the end of September 2005.
The real effective exchange rate of the rand declined by only 0,7% from the end of 2004 to the end of 2005 signalling that there was little net change to the international competitiveness of exporters.
The negative balance on the current account amounted to 4,2% of gross domestic product in 2005 compared with 3,4% in 2004.
On the domestic economic front, real economic growth lost some momentum in the second half of 2005 and decelerated from an annualised rate of four percent in the third quarter of 2005 to three-and-a-half percent in the fourth quarter.
Growth in aggregate real gross domestic expenditure slowed considerably from an annualised rate of seven and a half percent in the third quarter of 2005 to four percent in the fourth quarter.
”A substantial slowdown in the pace of inventory investment more than countered market acceleration in real domestic final demand,” the bank said.
Real gross fixed capital formation rose at brisk annualised rates of seven percent in the third quarter of 2005 and seven and a half percent in the fourth quarter.
The bank said this was due to a solid expansion of real capital outlays by private business enterprise and public corporations.
While the growth in total factor income increased from eight percent in the third quarter to ten and a half percent in the fourth quarter, gross savings as a percentage of gross domestic product decreased from 14% to 13% in the same time.
Although the number of people employed increased in 2005 the rate of unemployment remained mostly unchanged at 26,7%.
The bank was happy that the CPIX consumer price inflation remained ”well contained” in 2005.
It averaged 3,9% in 2005 which is well within the three to six percent inflation target.
Internationally the global economy continued to expand at a robust pace, the bank said.
”Output growth is expected to moderate from more than five percent in 2004 to around four percent in 2005, continuing the steady global performance during the past few years,” it said. – Sapa