South Africa’s fourth quarter current account balance improved, but deteriorated for 2018 as a whole

SOUTH AFRICA - Report 07 Mar 2019 by Iraj Abedian

Data released by the South African Reserve Bank shows that there was a significant narrowing of the country’s current account deficit during the fourth quarter of 2018 from the third quarter as it contracted by R70.2 billion, from R180.4 billion to R110.2 billion. The current account deficit as a ratio of GDP hence improved from 3.7% in the third quarter to 2.2% in the fourth quarter of 2018. Notwithstanding the improvement in the metric in the last quarter of the year, as a whole, South Africa’s current account as a ratio of GDP deteriorated from 2.5% in 2017 to 3.5% in 2018.

The marked improvement of the current account in the fourth quarter of 2018 was largely the result of a large trade surplus of R17.17 billion in December 2018, which was also the largest recorded in over 2 years. The impressive December 2018 trade surplus did not, however, come about as a result of increased exports, but was instead the result of imports declining more than exports during the month. Nevertheless, the overall value of merchandise exports increased by R47 billion during the fourth quarter, while that of merchandise imports declined R15 billion. Even so, the country’s trade surplus deteriorated from 64.9 billion in 2017 to 24.3 billion in 2018.

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