Ethel Hazelhurst

South Africa’s trade deficit subsided to R2.7 billion in December last year from R7.9bn in November and an October peak of R24.2bn. Annabel Bishop, the chief economist at the Investec group, noted that the deficit for the whole of last year, at R117.7bn, was over five times the R16.9bn shortfall in 2011.

Elna Moolman, the South Africa economist at Renaissance Capital, said: “This is the first time since 2008 that South Africa recorded a trade deficit in December. The seasonal improvement is usually sufficient to create a surplus.”

The deficit widened over the year as imports increased almost 15 percent and exports rose less than 1 percent.

The impact of rising imports was blunted in December. According to Bishop, the fact that retailers completed their deliveries of goods for sale at Christmas by the end of November contributed to a 15.8 percent fall in imports in December.

And Kevin Lings, the chief economist at Stanlib, said imports of machinery and equipment fell by a “massive R3.3bn” in the month, while imports of vehicle components dropped by R1.8bn, chemical imports by R1.5bn and base metals by R1.2bn.

Throughout the year exporters faced the double challenge of shrinking markets abroad and supply problems at home. A recession in the euro zone, no growth in Japan and a slowdown in China reduced demand for South Africa’s exports. Export prices also suffered because of reduced demand for commodities.

The problem was compounded by unrest in the mining sector, which disrupted output. In its December quarterly bulletin, the Reserve Bank noted widespread industrial action “contributed to the country’s lacklustre export performance”.

Lings said the December improvement in the trade account was in line with market expectations. He predicted it would lead to “a much improved current account deficit in the fourth quarter”. This deficit was equal to 6.4 percent of gross domestic product in the third quarter.

However, he warned the “rand exchange rate remains at risk of weakening unless South Africa is able to continuously attract a significant amount of foreign investment”.