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Current account deficit not sustainable – Roodt

15th October 2014

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South Africa's current account deficit is not sustainable and South Africans are not investing enough, Efficient Group chief economist Dawie Roodt said on Wednesday.

South Africa's current account deficit of around five to six percent was "quite big", Roodt told journalists in Johannesburg.

"A current account deficit tells us you import more than you export. It also tells you that you consume more than what we produce," he said.

"It also tells you that... we save less than what we invest and we don't invest enough."

Roodt compared a deficit of six percent to a farmer who produced 100 bags of mielies and consumed 106 bags of mielies every year.

"That is unsustainable because the only way you can consume 106 [bags] while producing 100 is borrowing the extra six from your neighbour," Roodt said.

"The day will come when your neighbour says 'Give me back my mielies', and that's what's happening at the moment."

Foreigners were pulling their money out of South Africa and the rand was coming under pressure.

"This is a big deficit in the South African economy and it's an indication of the massive capital shortage in South Africa."

Edited by Sapa

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