JOHANNESBURG, Sept 11 (Reuters) – South Africa’s current
account recorded its largest shortfall in over three years in
the second quarter of 2012 as exports fell because of subdued
external demand, while increased government spending on wages
pushed gross domestic expenditure up.
The Reserve Bank said on Tuesday higher dividend payments to
the rest of the world resulting in a shortfall on the service,
income and current transfer account also added to the current
account gap.
“Despite a depreciation in the exchange value of the rand,
export volumes declined notably, influenced by the general
moderation in global demand,” the central bank said in its
latest quarterly bulletin.
“With South Africa’s terms of trade also registering a
modest further deterioration, the deficit on the current account
widened to 6.4 percent of GDP.”
The prices of imported goods grew faster than export prices,
with the value of exports contracting.
However, gross spending accelerated in the quarter, led by
government spending on wages after public sector trade unions
negotiated a 7 percent salary increase in July.
The bank said that even though net dividend payments to
non-residents were expected to remain high, the forecast
increases would not be hugely significant.
South Africa’s second quarter growth rebounded to 3.2
percent due to a big recovery in the mining sector. However the
bank said that growth rate may not be sustainable.
“The non-primary sector of the economy has slowed down and
the boost we got from mining may come to haunt us in the next
quarter,” said Rashad Cassim, head of research the central bank.
(Reporting by Xola Potelwa; Editing by Ed Cropley)
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