'Limited SA fallout from Japan crisis'

Pretoria - The impact of Japan's nuclear crisis on South Africa's economy is likely to be limited but if it worsens it could hurt, South Africa Reserve (Sarb) Bank chief economist Monde Mnyande said on Tuesday.

Mnyande said South Africa's economic recovery was continuing and preliminary investigations showed that while Japan was a significant commercial partner, the "near-term negative impact in terms of trade linkages is likely to be limited".

"Should the situation deteriorate further to trigger a large-scale evacuation of people ... the negative economic fallout for South Africa and other trade partners would be amplified considerably," he said at a briefing.

South Africa's current account gap narrowed to a seven-year-low in the fourth quarter of 2010 while expenditure slowed, partly due to a moderation in household spending, the Reserve Bank said.

It said the current account deficit narrowed to 0.6% of gross domestic product (GDP), from a slightly revised 3.1% in the third quarter.

Analysts polled by Reuters had expected a shortfall of 2.55% to GDP.

"The smaller current account deficit in the second half of 2010 reflects the much-reduced savings investment gap, indicative of the subdued pace of fixed capital formation and the resulting lower levels of imports, particularly of capital and intermediate goods," the Sarb said.