Johannesburg - South Africa recorded a second consecutive trade surplus in April even as exports of precious metals and stones and other mineral products fell.
The surplus narrowed to R430 million from a revised R2 billion in March, the SA Revenue Service (Sars) said yesterday. The cumulative deficit for this year is R18.7bn, 42 percent less than the R32bn shortfall in the first four months of last year.
Read: SA's budget deficit narrows
Slow growth and waning demand in South Africa’s main export markets led to a slump in shipments, even as the rand fell 27 percent in value to the dollar since the start of 2015.
Elna Moolman, an economist at Macquarie Group, said while a trade shortfall could continue to put pressure on the current account, the broadest measure of trade in goods and services, the surplus should add support to the currency.
The trade surplus was “to some extent a reaction to rand weakness”, Moolman said. “Looking at the general trend, which has improved, it should be positive for the rand.”
Exports fell by 3.2 percent to R92.2bn in April as the shipments of precious metals and stones fell by R1.7bn, or 9.5 percent, and exports of mineral products, which include iron ore and coal, fell R527m, or 3.1 percent. Imports dropped 1.5 percent to R91.8bn after purchases of vegetable products slumped 34 percent, or R1.2bn, and imports of mineral products, which include oil, fell by 2.6 percent, or R334 million.
Rating risk
Karl Gotte, the head of Standard Bank’s commercial banking unit, said economic and business confidence might be tested by the looming possibility of a credit downgrade by S&P Global Ratings and Fitch.
He said in the event of a downgrade, consumers and business would be further restrained.
“Expansion plans for businesses are likely to be influenced by economic pressure that currently exists. Businesses should focus on doing more with less until such time that the economy is more conducive for growth,” Gotte said.
Meanwhile, the household sector faces increased financial strain in the rest of the year against the background of a stagnating economy, expectations of rising inflation and upward pressure on interest rates.
Absa Home Loans property analyst Jacques du Toit said yesterday: “These developments have the potential to negatively impact consumer credit-risk profiles, increase financial vulnerability and drive the level of confidence lower. These factors, together with credit providers’ risk appetites and lending criteria, will cause growth in household credit extension to remain low, with an increasing risk of credit growth declining further.”
Private sector credit extension growth slowed to its weakest since December 2013, falling to 7.1 percent in April from 8.7 percent in the prior month, mainly pushed down by slower growth in credit to households.
Credit to households fell by 2.2 percent month on month, pushing the annual growth rate to a record low of 2.3 percent.
Credit to companies rose by 0.1 percent month on month.
Du Toit said the value of growth in outstanding credit balances, especially unsecured credit, in the South African household sector was in April impacted by the inclusion of data from the new African Bank, which started operations that month.
Investec economist Kamilla Kaplan said discounting April’s inclusion of African Bank data, the underlying trend in household credit growth remained subdued.
* With additional reporting by Bloomberg
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