Foreign direct investment into SA has declined steadily this year, but so has outward investment by local companies expanding offshore. SA recorded small inflows of direct investment on a net basis in the past two quarters, representing a turnaround from the sizeable net outflows seen over the past two years as companies stepped up efforts to internationalise their businesses. The shift in the direct investment trend made a small contribution to improving the financial account of SA’s balance of payments, which showed a surplus of 3.5% for the third quarter, up from 1.3% in the previous quarter, as it continued to attract more volatile portfolio capital inflows, particularly into its bond markets, as well as bank deposits from abroad. The Reserve Bank’s latest quarterly bulletin shows that those capital inflows were more than adequate to finance the deficit on the current account of SA’s balance of payments, which widened to 4.1% from a revised 2.9% in the third quarter as export pe...
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