SA's export performance looking bleak
Sarb said the deficit escalated to R204.1billion from a revised deficit of R143.5bn in the first quarter as the value of merchandise imports increased more than exports. It said trade balance switched from a surplus of R41.9bn in the first quarter of 2019 to a deficit of R27.2bn in the second quarter as the value of merchandise imports increased more than exports.
Investec economist Lara Hodes said that South Africa's export performance was likely to remain constrained on the back of a deterioration in international trade flows.
Hodes said international trade volumes had contracted for the eleventh month in a row in July.
“While import growth will likely be restricted by the moderation in the international oil price and subdued rates of domestic consumption, we could see the trade account recording a deficit position in the near term,” Hodes said.
“The most recent trade figures for July saw the trade balance make a move into deficit territory, with a reading of -R2.9bn, after recording a surplus of R5.4bn in June and R1.7bn in May.
"This could in turn keep the current account deficit entrenched between -3 and -4percent in the third quarter.”
In April, Sarb said that the trade balance increased by R3.4bn against market expectations of a R1.6bn surplus.
The South African Revenue Service said at the time that the gap widened to R11.18bn, excluding trade with neighbouring Botswana, Lesotho, Namibia and Swaziland.
Yesterday, Sarb said the deficit fell to 4percent in the quarter from 2.9percent in the first.
It said the higher value of merchandise imports reflected increases in volumes as well as prices, while the increase in the value of exported goods was driven by higher prices.
On the upside, the shortfall on the services, income and current transfer account narrowed slightly to R176.9bn in the second quarter from R185.5bn in the first quarter, due to smaller deficits on the income and current transfer account.
The services account deficit for the quarter improved to 3.5percent of GDP from 3.8percent in the first quarter.
NKC Africa Economics said a slight improvement in the services account and a notable deterioration in the trade account was instrumental in the widening of the deficit.
NKC analyst Elize Kruger said the situation was unlikely to improve in the near future.
“Intensifying global trade tensions could further depress South Africa’s trade performance in coming quarters.
"It could place added pressure on the current account deficit,” Kruger said.