This larger deficit resulted mainly from increased net investment-income payments to non-resident investors which, due to its relative size, materially affect the balance on the services account.”

Real gross domestic expenditure accelerated to 8.3% in the first quarter of 2011, says the South African Reserve Bank. "Growth in real gross domestic expenditure accelerated significantly from an annualised rate of 2.4% in the fourth quarter of 2010 to 8.3 per cent in the first quarter of 2011.

This acceleration followed a further expansion in all the components of domestic demand," said the Reserve Bank in the June Quarterly Bulletin, BUA reported on June 21st.

Growth in final consumption expenditure by households accelerated slightly from an annualised 4.8% in the final quarter of 2010 to 5.2% in the first quarter of 2011.

This was due to the increased pace spending on durable, semi-durable and non-durable goods, which was partly offset by a moderation in household expenditure on services.

.

Meanwhile expenditure on semi-durable goods, that had declined in the third quarter of 2010, increased in the first quarter of 2011 at an annualised rate of 8.6%. The strongest growth in this sector was registered in clothing and footwear.

Growth in household spending on non-durable goods accelerated to 3.4% in the first quarter of 2011 from a low rate of 0.2% in the final quarter of 2010. This increase was primarily due to spending by household fuel and power.

The report highlighted that the nominal level of household debt rose even further in the first quarter of 2011.

Consistent with a lower interest rate environment, the debt- service ratio of households edged marginally lower from 7.2% in the fourth quarter of 2010 to 6.9% in the first quarter of 2011 - which is the lowest ratio since the third quarter of 2005.

Growth in real final consumption expenditure by general government accelerated from an annualised rate of 3.9% in fourth quarter of 2010 to 9.5 per cent in the first quarter of 2011.