JOHANNESBURG – South Africa's throttled economy found a breather on Friday as August's balance of trade and private sector credit extension surprised on the upside, giving hope that the economy was on a strong footing in the middle of the third quarter.
The trade balance swung from a deficit of R5.2 billion in July to a surplus of R8.8bn in August. But year to date, the trade surplus of R2.6bn fell way short of the R39.9bn recorded in the comparative period last year.
Elize Kruger, an analyst at NKC African economic said while net trade was a positive contributor to second-quarter gross domestic product (GDP), the trade account could easily slip into negative territory again in the third quarter.
“There are also growing signs that the US-China trade war could escalate, while the rand exchange rate's renewed weakness adds to the risks,” Kruger said. “We forecast a wider current account deficit of 3.5 percent for 2018 compared to a GDP deficit of 2.4 percent of GDP in 2017.”
A smaller shortfall tends to ease pressure on the rand and on its current account, the broadest gauge of traded goods and services.
Earlier this month, data from the SA Revenue Service showed that South Africa's current account deficit narrowed to R163.8bn in the second quarter from R219.4bn in the previous period.
The average exchange rate in August weakened to about R14.10 against the dollar, compared to an average of R12 in July.
Meanwhile, Sars said private sector credit rose 6.74 percent from a year earlier in August, beating market consensus of a 5.5 percent gain.