The Mare Caribicum lies at anchor off Port of Ngqura . Picture: THE HERALD
The Port of Ngqura . Picture: THE HERALD

SOUTH Africa’s current account deficit expanded more than expected to 5.1% of gross domestic product (GDP), or R208bn, in the fourth quarter of last year from 4.3% in the third quarter as the trade deficit widened sharply over the period, the Reserve Bank’s quarterly bulletin showed on Tuesday.

The rand weakened to R15.44/$ following the news from R15.26/$ before the release of the current account deficit.

Although the weak rand boosted the export earnings of domestic producers, the benefits thereof were “more than fully negated” by a further decline in the international prices of South African export commodities in the fourth quarter of last year, the Bank said in the bulletin.

The widening of the current account deficit in the fourth quarter compared with the third was also due to a widening in the shortfall on the services, income and current transfer account as gross dividend receipts from abroad decreased at a faster pace than the decline in dividend payments to foreign investors.

The current account deficit narrowed to 4.4% of GDP, or R174bn, last year from 5.4%, or R207bn, in 2014.

The data mean SA’s reliance on foreign investors through capital inflows was reduced last year compared with 2014 and that fewer rands were needed to finance the current account shortfall. SA finances the current account deficit through capital inflows.

The shortfall eased mainly as the trade deficit narrowed significantly to 0.9% last year from 1.8% in 2014.