South Africa Posts Biggest Trade Deficit in Three Years

South Africa posted a trade deficit of 13.5 billion rand ($1.8 billion) in January, the biggest in three years, as machinery imports surged and exports slumped.

The shortfall followed a surplus of 4.7 billion rand in December, the Pretoria-based South African Revenue Service said in an e-mailed statement today. The median estimate of eight economists in a Bloomberg survey was for a deficit of 3.1 billion rand.

Exports may come under pressure this year as a debt crisis in Europe, which buys a third of South Africa’s manufactured goods, pushes the region into recession. South Africa’s current account deficit, the broadest measure of trade in goods and services, will probably widen to 4.3 percent of gross domestic product this year from an estimated 3.3 percent in 2011, the National Treasury said on Feb. 22.

“It does raise certain alarm bells,” Dennis Dykes, chief economist at Nedbank Group Ltd., said in a telephone interview from Johannesburg. The slowdown in Europe “must have played some role. As we go deeper into this year it could play a bigger impact.”

The rand was at 7.4473 against the dollar as of 3:28 p.m. in Johannesburg from 7.4325 before the data was published. The yield on the benchmark rand bond due in 2015 fell four basis points, or 0.04 percentage point, to 6.61 percent.

Precious Metals

Exports dropped 14 percent from a month earlier to 54 billion rand in January, led by a 43 percent decrease in vehicles and aircrafts and a 28 percent decline in precious metals. Imports rose 16 percent to 67.5 billion rand, as machinery shipments surged 20 percent.

Interest rates at the lowest level in more than three decades and rising credit demand may help fuel consumer spending on imports. Growth in borrowing accelerated to 7.3 percent in January, the fastest pace in more than two years, the Reserve Bank said today. The central bank has kept its benchmark repurchase rate at 5.5 percent since November 2010 to help support the economy’s recovery.

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

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