Deterioration in the Current Account Balance Persists

SOUTH AFRICA - Report 14 Jun 2016 by Iraj Abedian

After easing to 3.1% during the second quarter of 2015 from 5.1% in the first quarter, the deficit on the current account as a percentage of GDP has been rising steadily since the third quarter of 2015, and registered 5.0% in the first quarter of 2016. The widening of the current account deficit took place despite a narrowing in the country’s trade deficit from R41 billion in the last quarter of 2015 to R38 billion in the first quarter of 2016. This was due to the widening of the “net service, income, and current transfer” account deficit (from R150 billion to R174 billion) resulting from increased net income payments to the rest of the world (arising mostly from an increase in net dividend payments to the rest of the world). Hence, the balance of payments on the current account registered a deficit of R211 billion in the first quarter of 2016.

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