South Africa’s current-account deficit widened to 6.8 percent of gross domestic product in the third quarter, the biggest gap in more than five years, as a weak rand boosted import costs while strikes and subdued global demand hurt exports.
The gap in the current account, the broadest measure of trade in goods and services, grew to an annualized 233 billion rand ($22.6 billion), the Reserve Bank said in its Quarterly Bulletin, released today in the capital, Pretoria. The median estimate of 11 economists surveyed by Bloomberg was for a deficit of 6 percent of GDP. The second-quarter shortfall was revised to 5.9 percent from 6.5 percent.
“A higher volume of merchandise imports coincided with a firm increase in the rand price of such imports, lifting South Africa’s import bill significantly over the period,” according to the report. “Exports were constrained by lustreless export markets and domestic supply-side constraints,” such as strikes.
The rand has plunged 18 percent against the dollar this year, making it the worst-performing of 16 major currencies tracked by Bloomberg. Subdued international demand has left manufacturers struggling to take advantage of the weaker currency to boost exports.
“If it were not for the revision in the previous quarter, the deficit would have been 7.4 percent,” Ilke van Zyl, an economist at Vunani Securities Ltd. in Johannesburg, said by phone. “We need ever-increasing financing to fund our external imbalances, which is a worry. It’s an ongoing symptom of the mismanagement of the country.”
The rand fell as much as 0.5 percent against the dollar after the release of the data. It traded at 10.2929 per dollar at 10:21 a.m., down from 10.2741 late yesterday.
Strikes in the automotive industry hampered exports of manufactured goods, with vehicle shipments dropping “substantially” in the third quarter, the bank said. Carmakers including Volkswagen AG (VOW) and Toyota Motor Corp. (7203) resumed full production in October after a four-week strike over pay by workers at vehicle assembly and auto-component plants.
