Johannesburg - The trade deficit widened in August, recording the worst value this year excluding January, as exports of minerals such as coal and iron ore declined and oil imports rose.
The trade gap widened to minus R9.95 billion from a revised minus R1.1bn in July, the SA Revenue Service said yesterday. This was worse than market expectations of a R0.98bn deficit.
The deficit for the first eight months of the year was R36.3bn compared with R69.9bn in 2014.
Exports declined by 5.9 percent to R87.6bn, led by a 20 percent drop in shipments of minerals products.
Imports rose 3.6 percent to R97.6bn as purchases of vehicle and transportation equipment jumped 22 percent and the category that includes oil surged 12 percent.
The deficit on the trade account will keep pressure on the current account, the broadest measure of trade in goods and services, and the rand, which fell to a record against the dollar this week.
Shortfall
The current account shortfall eased to 3.1 percent of gross domestic product in the three months through June, the lowest in almost four years, from 4.7 percent in the previous quarter.
“The broadly unfavourable global growth prospects are likely to exert pressure on South Africa’s potential export growth,” Kamilla Kaplan, an economist at Investec in South Africa, said before the data was released.
Azar Jammine, the chief economist at Econometrix, said a widening of the deficit in the month of August tended to be a regular feature as businesses started building up inventories ahead of the Christmas season and imports rose.
He said, however, the widening of the deficit in August was greater than expected and was characterised more by steepness in the decline of exports of minerals, presumably due to lower commodity prices, than to any major improvements in imports.
Jammine warned against being overly embroiled in the superficial pessimism of the data. “The deterioration in the trade balance seen in August might therefore prove to be a temporary phenomenon within a broadly-based improvement over the past six months.
“Nonetheless, the markets are likely to interpret the data negatively and punish the rand for this, although it is the course of international rather than local developments which are influencing the South African currency.”
Soft rand
The rand has weakened 16 percent against the dollar this year. The positive effect of the depreciation on export volumes was limited by the slowing global economy, electricity supply constraints and declining tourism receipts, the Reserve Bank said last week.
The currency was little changed at R13.854 per dollar at 2.15pm from before the data was released. By 6.30pm yesterday, the rand was quoted slightly firmer at R13.8312 against the US unit.
Meanwhile, the World Trade Organisation (WTO) cut its forecasts for global goods trade yesterday after quarterly growth turned negative, with trade shrinking by an average of 0.7 percent in the first two quarters of this year.
The WTO sees world trade growth of 2.8 percent this year and 3.9 percent in 2016, revised down from the forecasts it made in April of 3.3 percent and 4 percent, respectively. Risks, including a potential US interest rate rise and slowing in developing economies, were “firmly on the downside”, it said.
* Additional reporting by Bloomberg and Reuters
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