Q3 current account deficit widens as trade surplus narrows

South Africa’s current account deficit widened slightly in the third quarter from the second quarter as Africa’s most industrialised economy recorded a narrower quarterly trade surplus, the central bank said on Thursday.

The poor numbers will dampen the positive momentum in the economy after data on Tuesday showed South Africa emerged from its first recession in almost a decade in the third quarter, giving a boost to President Cyril Ramaphosa who has pledged to re-start growth after a decade of stagnation.

South Africa’s current account deficit widened to 3.5% of gross domestic product (GDP) in the third quarter, from 3.4% in the second quarter, the South African Reserve Bank said.

The deficit was marginally larger than the average forecast by economists surveyed by Reuters, who had expected it at 3.4% of GDP.

The rand extended its losses against the dollar to 13.95 as of 0907 GMT, 0.72% weaker, from 13.90 before the release of the data.

The quarterly trade balance recorded a surplus of R14 billion ($1 billion) from a surplus of R38.3 billion in the second quarter, the Reserve Bank said.

“The deterioration in the trade balance came about as the value of merchandise imports increased more than that of net gold and merchandise exports,” the bank said.

“These higher values reflect increases in both volumes and prices of exported and imported goods.”