Reserve Bank update due today

THE South African Reserve Bank was expected to publish its fourth-quarter 2009 economic update today.

THE South African Reserve Bank was expected to publish its fourth-quarter 2009 economic update today.

A survey of 10 leading economists by I-Net Bridge has pinned the current account deficit down at -3,6percent of GDP from the -3,2percent deficit in the third quarter. The forecast range for the expected deficit varied from -4,3percent to -3,5percent of GDP.

The main reason for the slight worsening is seen as a stronger revival in imports on the back of inventory replenishment and as the economic recovery increases demand. Challenges continue to exist in the developing world, thus holding exports back.

A current account deficit occurs when a country's imports of goods, services and transfers is greater than its exports of goods, services and transfers. If it is run to increase productivity and exports in the future, then a deficit is not viewed very negatively, and SA is generally placed within this boat.

However, the extent of the increases in 2007 and 2008 (7percent to 8,5percent) caused some observers to raise concern, especially as the funding largely comes from foreign investment. - I-Net Bridge

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