However, while the trade surplus slid in July, it still beat market expectations of a surplus of R5.8bn.
Sars said while July’s trade balance slid, when looked at on a yearly basis, there was an improvement.
“The year-to-date trade balance surplus (January 1 to July 31, 2017) of R36.6bn is an improvement on the deficit for the comparable period in 2016 of R4.7bn. Exports for the year-to-date grew by 4.4%whilst imports for the same period declined by 2.2%,” the revenue services said.
On a month-on-month basis exports fell 8.7% to R93.1bn in July, while imports were down 8% to R84.1bn.
The decline in exports was led by precious metals and stones which decreased by 21% to R3.8bn and base metals slid 12% to R1.4bn in the period.
Mineral products led the decline in imports, which tanked 27% to R3.2bn, and base metals, which declined 18% to R908million.
Kamilla Kaplan, an economist at Investec, said on a cumulative year-to-date basis, the lift in commodity demand and prices has translated to an increase in South Africa’s commodity export values and that the current account balance should remain biased towards small surpluses or relatively contained deficits in the remaining months of the year.
“In the first seven months of the year exports of mineral products, precious metals and base metals have risen by 33.5% year-on-year, 2.6%-year-on-year and 1.2% year-on-year, respectively.”
“On the import side, imports of agriculture products has contracted by 32.1% year-on-year as domestic agriculture output has recovered post the drought,” Kaplan said.
South Africa’s exports to the rest of the continent decreased by R4.9bn in July, while imports to the content increased by R112m in the period under review. South Africa’s trade surplus with Africa of R17.4bn in July is a deterioration in comparison to the R22.4bn surplus recorded in June. However, South Africa improved its trade deficit with Europe in July, registering a shortfall of R3.8bn, an improvement compared to the R5.2bn deficit recorded from the previous month.
South Africa also bettered its trade deficit with Asia, registering a deficit of R9.8bn in the period, an improvement from R11.7bn deficit recorded in June.
Karl Gotte, the head of Standard Bank commercial banking, said the performance on the trade balance was bolstered by improved global demand that had seen an increase in export values in relation to imports.
“Domestic retail sales expanded in the second quarter following a contraction in the first quarter,” Gotte said.