Fall in S. Africa’s current account deficit not as good as it seems

South Africa’s current account deficit fell to close to a two-year low in the final quarter of last year. But while on paper this appears to be good news, a deeper look reveals that it was driven primarily by a fall in imports, rather than a rise in exports. In other words, the narrowing of the deficit seems to have been caused by tighter financing conditions, rather than a fundamental improvement in external competiveness.