In spite of the slackening in the Q3, 2006, current account shortfall of SA will remain high for some time. Paradoxically, an increasing share of this deficit is due to the costs of servicing foreign capital inflows upon which the country relies to fund the overall shortfall. Current account balance of R90.5 Billion's (seasonally adjusted and annualized) in Q3 of this year entails a massive net payment of R28.2 Billion, and most of this money goes towards servicing overseas investments in SA.
As per Reserve Bank's Quarterly Bulletin for Q3, 2006 that was released on 8 December 2006, the current account deficit shrunk to 5.2% of GDP (Gross Domestic Product), whereas it was at an average of 5.9% during Q1 & Q2 of this year. These numbers give a clear indication that rising costs, for example overheads related to insurance and shipping, are incurred due to rising volumes of cross border trade. And, net inflow of foreign capital doesn't come in a flash to SA.
As per a Research Analyst's view at RNCOS, who has recently done a report named "Banking Sector in South Africa", "The reasons behind this spending habit comprise interest rates which stay relatively low, despite the recent hikes of 200 basis point."
The research report "Banking Sector in South Africa" helps clients study and analyze:
§Get an insight into the trends in market performance.
§Pinpoint sectors of growth and identify the driving factors.
§Identify market, brand leaders, and understand the competitive environment.
§Effect of Mzansi accounts on banking sector of South Africa.
§Financial sector charter and BEE affecting the banking sector in South Africa.
§Key Challenges and Strategies.
For more information visit: http://www.rncos.com/Report/IM0100.htm
