South Africa posted a record trade gap in January as companies boosted machinery imports and mining exports slumped, threatening to widen a growing current-account deficit and undermine the currency.
The shortfall reached 24.5 billion rand ($2.8 billion) last month compared with 2.7 billion rand in December, the Pretoria-based South African Revenue Service said today in an e-mailed statement. The median estimate of eight economists in a Bloomberg survey was 9.7 billion rand.
“This is putting further strain on the already weak backdrop that South Africa finds itself in,” Michael Keenan, a strategist at Absa Capital, said in a phone interview from Johannesburg. “This is going to erode gross domestic product and reemphasize South Africa’s fragile macroeconomic background.”
South Africa’s deficit in 2012 was more than six times larger than a year before at 117.7 billion rand as slower global growth and mining strikes curbed exports in Africa’s largest economy. That put pressure on the current account, the broadest measure of trade in goods and services, contributing to the rand’s slump to a four-year low.
The rand slumped against the dollar after the data was released, extending its decline today to 1.4 percent to 8.9411 per dollar at 2:16 p.m. in Johannesburg. The yield on the rand debt due in 2021 dropped 3 basis points to 6.38 percent.
Exports dropped 11 percent to 53 billion rand in January from the previous month, led by a 19 percent slump in precious and semi-precious stones and metals. Shipments of vehicles, aircraft and vessels fell 39 percent, according to the revenue agency.
Purchases of machinery from abroad surged by 5 billion rand, or 35 percent, in January, resulting in total imports climbing 25 percent to 77.8 billion rand. Shipments of original equipment components increased 84 percent.
The current-account gap will average 6.2 percent of gross domestic product in the next three years, higher than a previous estimate of 5.6 percent, the National Treasury said in its Budget Review yesterday. South Africa relies mainly on foreign investment in stocks and bonds to finance the shortfall, inflows that have fluctuated as investors sold riskier, emerging-market assets.
The rand has weakened 5.1 percent against the dollar this year, the third-worst performer of 16 major currencies tracked by Bloomberg after the Japanese yen and British pound.