Data from the South African Reserve Bank yesterday showed that the current account reverted to a surplus of R297.5 billion in the third quarter. Picture: Bongani Shilubane/ African News Agency (ANA)
JOHANNESBURG – THE COUNTRY’S current account swung into a substantial surplus in the third quarter as exports shone through on continued recovery in global demand.
Data from the South African Reserve Bank (SARB) yesterday showed that the current account reverted to a surplus of R297.5 billion in the third quarter from a deficit of R23bn in the prior quarter.
This upswing was the largest current account surplus in rand value since available records began in 1960.
The current account balance as a ratio of gross domestic product (GDP), reverted to a surplus of 5.9 percent during the period, the highest since the third quarter of 1988. This was a significant improvement compared with the deficit of R123.7bn, or 2.9 percent GDP delcine recorded in the second quarter.
The rand value of the surplus was also more than four times the size of the previous largest surplus of R63.4bn recorded in the first quarter.
SARB said South Africa’s export volumes bounced back in the third quarter in step with global trade, following the easing of Covid-19 lockdown restrictions and the related rebound in economic activity.
“As a result, South Africa’s trade surplus increased more than sixfold from R71.4bn in the second quarter to R453.6bn in the third quarter,” the reserve bank said. Expressed as a percentage of GDP, the trade surplus rose to 9 percent from a prior 1.7 percent.
The bank said the improvement in the trade balance resulted from the value of merchandise exports increasing substantially more than imports.
The higher value of merchandise exports resulted primarily from higher volumes while merchandise imports reflected an increase in prices.
SARB said the shortfall on the services, income and current transfer account narrowed meaningfully to R156.1bn in the third quarter from R195.1bn in the second quarter.
Investec’s Kamilla Kaplan said South Africa’s export performance was aided by the recovery in metals prices and global demand during the third quarter. The gold price experienced significant tailwinds in the third quarter, rising by as much as 16 percent as the yellow metal hit a new all-time high in August when it broke the $2 060 (R30 795) per ounce barrier.
However, South Africa’s terms of trade, including gold, deteriorated slightly in the third quarter as the rand price of imports increased more than that of exports.
“On the import side, the recessionary economic environment has compressed import growth,” Kaplan said.
“As an oil-importing country, South Africa’s import growth has also been dampened by the lower international oil price and generally lower crude oil import volumes amid weak demand.”