South Africa’s earnings have substantially increased in the third quarter of 2020 as exports shone through on continued recovery in global demand.
Data from the South African Reserve Bank (SARB) showed that the current account reverted to a surplus of R297.5 billion in the third quarter, from a deficit of R23bn in the prior quarter.
This upswing was the largest current account surplus in rand value since available records began in 1960.
The current account balance as a ratio of gross domestic product (GDP) reverted to a surplus of 5.9 percent during the period, the highest since the third quarter of 1988.
This was a significant improvement, compared with the deficit of R123.7bn, or 2.9 percent GDP decline recorded in the second quarter.
The rand value of the surplus was also more than four times the size of the previous largest surplus of R63.4bn recorded in the first quarter.
SARB said South Africa’s export volumes bounced back in the third quarter in step with global trade, following the easing of Covid-19 lockdown restrictions and the related rebound in economic activity.
“As a result, South Africa’s trade surplus increased more than sixfold from R71.4bn in the second quarter to R453.6bn in the third quarter,” the reserve bank said. This is expressed as a percentage of GDP, the trade surplus rose to 9 percent from a prior 1.7 percent.
The bank said the improvement in the trade balance resulted from the value of merchandise exports increasing substantially, more than imports.
The higher value of merchandise exports resulted primarily from higher volumes while merchandise imports reflected an increase in prices.
According to SARB, the shortfall on the services, income and current transfer account narrowed meaningfully to R156.1bn in the third quarter, from R195.1bn in the second quarter.