In Nomura’s opinion SA can only sustain a current account deficit of 3,5% of gross domestic product (GDP), versus 7% in the first quarter of this year.
It also takes into account the likely negative effect of the country’s growing budget deficit, which Finance Minister Pravin Gordhan says is set to exceed its original estimate of 3,8% of GDP this year.
For the rand bears, a weak currency is not a bad thing — it will boost demand for local exports when the global economy picks up momentum later this year.
SHOOT: Any country hoping to export its way out of tropuble is mistaken. We've gone into globalisation-in-reverse. It's a permanent shift. Local production, hyperlocal living is going to become the order of the day as we shift to De[ression-era economics.
In that context a strong currency doesn’t help, but it will help bring about lower inflation.