SA’s trade balance swung back into the red with a bigger than expected deficit in January as exports plunged much faster than imports, data from the South African Revenue Service (SARS) showed on Friday. SA had a trade shortfall of R3,3bn after December’s surprise surplus of R3,7bn. Reuters’ consensus forecast was for a deficit of R2,2bn.
Local markets were unruffled by the data, which is notoriously volatile. The deficit usually balloons in January on seasonal factors. Last year, it was a staggering R17,4bn. Analysts still think sluggish domestic demand will allow exports to outpace imports this year, despite sustained rand strength keeping the trade shortfall in check.
“Our relatively sanguine outlook on SA’s export sector, coupled with the view for a slow recovery in domestic imports, continues to point to a relatively narrow trade balance in 2010,” Absa Capital economist Jeffrey Schultz said.
Last year, the trade deficit shrank 64% to R25,8bn.
The shortfall on the current account, seen as the Achilles heel for SA’s economy, shrank to 4,3% of gross domestic product from 7,1% the previous year as SA joined the global recession. The current account is the broadest measure of trade in goods and services.
Most analysts expect it to expand moderately this year as the economic recovery gathers momentum.
Exports in January were 19,2% down on December’s, mainly because of steep drops in precious and semiprecious stones; vehicles, aircraft and vessels; and machinery and electric appliances.
Imports were down 4,1% on December’ s due to a slump in mineral products such as oil.
“It is the trend that matters, so the data for February will be looked at more closely,” Standard Chartered regional research head for Africa Razia Khan said.
“If the bounce-back in exports proves elusive, then, markets may start to pay more attention.”
Schultz said that he was encouraged by exports being 11% up on those of January last year; exports rose 1,1%, the first increase since last March, while imports fell 25,6%.
Other analysts agreed. “Exports should continue to improve in the months ahead, but could suffer setbacks if the global economic recovery loses momentum,” Nedbank economist Johannes Khosa said.
“Domestic demand, particularly for import-intensive durable consumer goods and fixed investment spending, is likely to stay subdued.”
