SA current-account deficit at seven-year low

South Africa’s current-account gap narrowed to a seven-year-low in the fourth quarter of 2010, while expenditure slowed, partly due to a moderation in household spending, the Reserve Bank said on Tuesday.

Monde Mnyande, Reserve bank Chief Economist and adviser to Governor Gill Marcus, said the recovery in Africa’s biggest economy was continuing and Japan’s nuclear disaster would have limited impact.

The Reserve Bank said the current account deficit narrowed to 0,6% of gross domestic product (GDP), from a slightly revised 3,1% in the third quarter. Analysts polled by Reuters expected a shortfall of 2,55% to GDP.

“The smaller current account deficit in the second half of 2010 reflects the much-reduced savings investment gap, indicative of the subdued pace of fixed capital formation and the resulting lower levels of imports, particularly of capital and intermediate goods,” the central bank said.

South Africa’s rand was little-changed after the data but yields on the benchmark 2015 bond narrowed to 7,855% from 7,895.

Imports fell by 2,2% in volume terms and 3,4% in value.

“The contraction in import volumes in the final quarter fo 2010 could largely be attributed to a decline in intermediate imports — more in particular crude oil imports — alongside a decline in the physical quantity of manufactured goods imported,” the bank said.

Partly due to lower imports, the surplus on the trade account increased to R86-billion rand compared to R30,3-billion rand in the third quarter.

Capital inflows slowed
On the financial account, the surplus was also much lower at 1.7 billion rand, from 29.5 billion rand in the third quarter as capital inflows slowed in the quarter.

“Financial and economic conditions in the United States and in other advanced economies improved somewhat in the fourth quarter of 2010,” the central bank said.

“These developments, alongside concerns about overheating and build-up of inflationary pressures in some emerging market countries, caused a slowdown in capital flows into these economies.”

Growth in spending slowed to 1,2% in the fourth quarter of 2010 from 6,2% in the previous quarter.

“This moderation in total expenditure partly reflected slower growth in real final consumption expenditure by the household sector,” the bank said.

Household spending growth slowed to an annualised 5,1% in the fourth quarter, from 5,7% in the third quarter. For 2010, household spending was up 4,4% after a 2% contraction in 2009.

The Reserve Bank said household debt as a ratio of disposable income receded to 77,6% from 78,7% in the third quarter and debt service cost decreased due to low interst rates.

The bank has cut the repo rate by 650 basis points to 5,5% since December 2008. It is expected to leave rates unchanged on Thursday. — Reuters

Advertisting

Lekwa municipality won’t answer questions about why children died in...

Three children are dead. More than a dozen homes have been gutted by fires in the past six months. And, as...

Failure to investigate TRC cases during the Mandela era delayed...

Counsel for late trade unionist Neil Aggett’s family decries the slow pace of instituting an inquest into his death

SANDF colonel accused of swindling colleagues in UN business scam

A senior soldier who is part of South Africa’s peacekeeping missions is accused by her colleagues of swindling them out of of hundreds of thousands of rands in a nonexistent business deal

Mass store and job cuts at Massmart

Changed market conditions and an appalling economy has hit low end cash-and-carry outlets
Advertising

Press Releases

South Africans unsure of what to expect in 2020

Almost half (49%) of South Africans, 15 years and older, agree or strongly agree that they view 2020 with optimism.

KZN teacher educators jet off to Columbia University

A group of academics were selected as participants of the programme focused on PhD completion, mobility, supervision capacity development and the generation of high-impact research.

New-style star accretion bursts dazzle astronomers

Associate Professor James O Chibueze and Dr SP van den Heever are part of an international team of astronomers studying the G358-MM1 high-mass protostar.

2020 risk outlook: Use GRC to build resilience

GRC activities can be used profitably to develop an integrated risk picture and response, says ContinuitySA.

MTN voted best mobile network

An independent report found MTN to be the best mobile network in SA in the fourth quarter of 2019.

Is your tertiary institution is accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

Is your tertiary institution accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

VUT chancellor, Dr Xolani Mkhwanazi, dies

The university conferred the degree of Doctor of Science Honoris Causa on Dr Xolani Mkhwanazi for his outstanding leadership contributions to maths and science education development.