PRETORIA — The deficit on South Africa’s current account narrowed in the fourth quarter of 2011, helped by lower dividend payments to non-resident investors, but spending by households and the government rose, signalling rising import pressures.
The current account shortfall edged lower to 3,6% of gross domestic product (GDP) in the fourth quarter from a revised 4,1% in the third quarter, the Reserve Bank said in its March Quarterly Bulletin released on Monday.
“It looks good . . . the fact that it’s the government is not surprising as it just keeps spending more and more, but it’s good to see that households are also doing the same,” said Christie Viljoen, an analyst with NKC Independent Economists.
The shortfall for the whole of 2011, however, widened to 3,3% of GDP from 2,8% in 2010, largely due to a sharp deterioration during the second quarter of last year.
Analysts polled by Reuters predicted a 4,1% gap in the current account for the fourth quarter.
The trade balance switched from surpluses at the start of the year to a deficit in the final quarter, as rising domestic demand pushed imports higher.
The deficit on the current account was, however, adequately covered by portfolio flows, the Reserve Bank said.
Spending growth accelerated to an annualised 5,1% in the fourth quarter from 4,8% in the third quarter, with both households and the government leading the way.
Household expenditure was up 4,6% in the last three months of the year, compared with a 3,8% rise in the third quarter.
“This faster pace of spending was consistent with a further increase in disposable income of households and positive wealth effects,” the central bank said.
It said the growth in spending by households was seen across all categories, with spending on services in particular regaining momentum.
The ratio of household debt to disposable income inched lower to 74,6% in the fourth quarter from 75,6%.
“Households’ debt-to-annual-income ratio . . . is still quite high compared with its average over the past two decades of approximately 64%,” Reserve Bank chief economist Monde Mnyande said in a press statement accompanying the release.