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South Africa Posts Biggest Trade Gap in More Than 3 Years

South Africa posted its biggest trade deficit in more than three years in September after wildcat strikes shut mines owned by Lonmin Plc (LMI) and Anglo American Platinum Ltd. (AMS), cutting production.

The shortfall widened to 13.8 billion rand ($1.6 billion) from 12.2 billion rand in August, the Pretoria-based South African Revenue Service said today in an e-mailed statement. The median estimate of five economists in a Bloomberg survey was a deficit of 8.2 billion rand. The gap is the biggest since January 2009.

Labor unrest has cut mining output by 10.1 billion rand this year, curbing exports just as Europe’s debt crisis lowers demand for South Africa’s manufactured goods. The trade gap reached a record 32.7 billion rand in the third quarter, adding to pressure on the current account deficit and threatening to undermine the rand.

“The impact of the mining strikes will be felt in the fourth quarter so the October number could also be weak,” Henk Viljoen, head of fixed-income investing at Stanlib Asset Management in Johannesburg, which oversees about $45 billion, said in a phone interview.

The rand extended its decline, falling to 8.6779 at 2:50 p.m. in Johannesburg, from 8.6743 before the release of the trade data.

Exports Drop

Exports fell 7.7 percent to 56.7 billion rand in September from the previous month, as base metal shipments slumped 9 percent, and exports of machinery and electrical appliances dropped 15 percent, the revenue service said. Exports of precious and semi-precious stones and metals dipped 4 percent, while mineral product shipments fell by the same margin, it said.

Imports declined 4.2 percent to 70.5 billion rand due to a 13 percent slump in chemical imports and a 19 percent reduction in equipment component purchases.

South Africa posted a current-account deficit of 6.4 percent of gross domestic product in the second quarter, the most in almost four years.

Africa’s biggest economy relies on foreign investment in stocks and bonds to finance the shortfall, inflows that have fluctuated this year as slower economic growth led some investors to sell riskier, emerging-market assets.

Trade Deterioration

“The year-to-date deficit in South Africa this year is more than seven times the deficit seen over the same period last year,” Razia Khan, the London-based head of Africa economic research at Standard Chartered Plc (STAN), said in e-mailed comments. “Making matters worse, the broad trade deterioration in South Africa comes amidst weak growth in the country. It is difficult to see where the upside lies.”

The National Treasury expects South Africa’s economic growth to ease to 2.5 percent this year, from 3.1 percent last year, partly because of the mining strikes.

The monthly trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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