JOHANNESBURG – South Africa’s economy has received a further body blow after recording the largest trade balance deficit since January in July with a trade gap of R4.6 billion.
The trade data released on Friday surprised on the downside as the markets had pencilled in a surplus of R5.4bn in the month, following a surplus of R11.9bn recorded in June.
The SA Revenue Services (Sars) said: “The year-to-date ( January 1 to July 31) trade deficit of R6.51bn is a deterioration on the surplus for the comparable period in 2017 of R33.21bn.”
The revenue services attributed July’s deficit to exports of R107.06bn against imports of R111.72bn.
The taxman further said excluding trade with neighbouring Botswana, Lesotho, Namibia and eSwatini, the country recorded a trade deficit of R11.53bn in July, highlighting the importance of intraregional trade.
July’s poor trade figures mirrored July’s budget deficit which came in at R96bn – the worst in 14 years, which brought the year-to-date deficit to R123.6bn.
The poor budget deficit print raised fears that Sars and National Treasury will miss their tax collection and fiscal consolidation targets.
On Tuesday, Statistics South Africa is due to release second-quarter gross domestic product (GDP) data with fears that the economy might have slipped into recession in the quarter.
Mamello Matikinca, the chief economist at FNB, said data suggests that the economy expanded by 0.5 percent quarter on quarter, but that there was a two-way forecast risk depending on whether there are any revisions to the first quarter data.
“The broad-based economic weakness suggests that our growth forecast for this year may well be too optimistic, as the growth required in the third and fourth quarter to achieve it will be a very tall order,” Matikinca said.
The country’s economy shrunk to its worst in nine years in the first quarter, laying bare the mammoth task facing the Cyril Ramaphosa administration in reviving a moribund economy.
First quarter 2.2 percent contraction was largely attributable to the mining sector which shank 9.9 percent during the quarter and manufacturing which decreased 6.4 percent, the biggest drop since the second quarter of 2015.
The agriculture, forestry and fishing industry also slumped 24.2 percent in the first three months of the year.