By Special Correspondent
Johannesburg, South Africa (CWBN)_ South Africa’s current account in the balance of payments moves out of negative terrain in the third quarter of 2020 and record surplus of R297.5-billion, the South African Reserve Bank stated. This surpluses are a reflection of the economy’s robustness this year and rand’s liveliness.
The current account is part of a country’s balance of payments and is basically, indicates the volume of transactions the economy does with the rest of the world, including imports and exports, foreign aid flows, dividends that go out to foreign investors.
The huge surplus recorded in the third quarter (Q3) of 2020 was four times the size of the previous record in Q1 of this turbulent year. This is equivalent to 5.9% of the country’s GDP. In Q2, there was a shortfall of R123.7-billion, or 2.9% of GDP. In Q3 1998, the surplus was not as great in rand terms. It was, more or less, equal to 6% of GDP.
There are a number of factors that contributed to the surpluses. ‘South Africa’s export volumes increased in the third quarter of 2020, as the global trade kicked start, after the easing of Covid-19 lockdown restrictions. This resulted South Africa’s trade surplus to increase more than six-fold from R71.4-billion in the second quarter of 2020 to R453.6-billion in the third quarter stated the South African Reserve Bank said in a statement.
High prices for the minerals and metals that South Africa produces and exports is one of the major contributory factors. In September Mineral sales increased to 25.9% year-on-year even though the production remained at lower levels. In October, the first month of the current quarter, minerals sales was up and recorded 30.7% while production reduced to 6.3%, Statistics South Africa stated and this is a positive start to Q4.
