The South African Revenue Services (Sars) on Friday said that excluding trade with neighbouring Botswana, Lesotho, Namibia and Swaziland, the country's trade gap widened to R11.18bn.
“On a year-on-year basis, the R3.43bn trade deficit for April 2019 is a deterioration from the R1.88bn surplus recorded in April 2018. Exports of R103.7bn are 17.3percent more than the R88.48bn exports recorded in April 2018. Imports of R107.18bn are 23.8percent more than the R86.60bn imports recorded in April 2018,” Sars said.
The Institute of International Finance in April warned that risks remain skewed toward the downside as South Africa continues to face large external financing needs due to a persistent current account deficit.
South Africa's current account deficit narrowed to 2.2percent of gross domestic product (GDP) in the fourth quarter of 2018 due to weak demand and stronger exports.
Lara Hodes said, with the inclusion of the April reading, the trade account registered a deficit of R7.5bn for the year-to-date versus a marked deficit of R16.2bn during the same period in 2018.
“Going forward, renewed trade tensions between China and the US would further disrupt global supply chains, hindering trade and thereby constraining South Africa's export growth forecast,” Hodes said.
All eyes will this week be on first quarter GDP, with the South African Reserve Bank having already said it expected that the economy contracted in the first quarter after poor mining and manufacturing output data in the quarter.
FNB chief economist Matikinca-Ngwenya said high frequency data for the first quarter suggests that we can expect a contraction on a quarter-on-quarter, annualised basis.
“Mining, manufacturing and trade sectors likely contracted in the first quarter and should weigh heavily on the GDP figure. Moreover, intermittent power shortages certainly detracted from GDP growth,” said Matikinca-Ngwenya.
“Overall, we expect the data to affirm the key themes of subdued household demand, in line with below-inflation wage growth, as well as a dearth of private sector fixed investment. We anticipate the current account deficit, as a percentage of GDP, to have widened in the first quarter. The combination of a trade deficit and a weak GDP print are the main factors informing this expectation.”
South Africa’s battered economy has not grown more than 2percent since 2013 and grew by a pedestrian 0.8 percent this year.
The central bank last month cut this year's growth from 1.3percent to 1percent while the Organisation for Economic Development and Co-operation has slashed South Africa’s GPD growth from 1.5percent to just 0.9percent.