ECONOMICS
Current account shortfall widens
Many economists still expect a second rate cut in 2017
Although the current account deficit continues to widen, many economists still expect a second rate cut in 2017 as the monetary policy committee’s September meeting approaches. The deficit widened in the second quarter to 2.4% of GDP, from 2.0% the previous quarter. The Reserve Bank’s Quarterly Bulletin released on Thursday showed an increased trade surplus was offset by a larger shortfall on services, income and current transfer payments. The deficit has, however, narrowed significantly from an average of more than 5% of GDP from 2012-15. The current account is indicative of SA’s trade with the rest of the world. "Overall, the limited current account shortfall should help to keep pressure on the rand contained and is unlikely to prevent the Reserve Bank from lowering interest rates," Capital Economics economist John Ashbourne said on Thursday. Nedbank economist Isaac Matshego expected the deficit to widen further in the coming quarters, albeit marginally, as domestic demand benefit...
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