South Africa’s trade gap widened in July as oil imports increased and local car manufacturers boosted purchases of components during a strike.
The trade deficit increased to 6.9 billion rand ($650 million) from a revised 470 million rand in June, the Pretoria-based South African Revenue Service said in an e-mailed statement today. The median estimate of 12 economists surveyed by Bloomberg was for a shortfall of 4 billion rand.
About 220,000 workers in the metals and engineering industry downed tools for four weeks in July, forcing carmakers like General Motors Co. and Ford Motor Co. to shut their plants due to a shortage of components. Johan van Zyl, president of Toyota Motor Corp.’s South African unit, said companies lost 16,000 units in production because of the stoppage, the Johannesburg-based Business Day reported today.
“The figures are disappointing and it’s largely indicative of the fact that we saw the strike in the metals and engineering sector throughout July, which weighed on base metals and vehicle exports,” Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities, said by phone from Johannesburg today. “South Africa’s cumulative deficit in the first seven months of 2014 is extremely high and that’s going to place some level of pressure on the currency.”
The shortfall so far this year is 55.5 billion rand compared with 41.1 billion rand for the same period in 2013, the Revenue Service said. South Africa’s current-account deficit probably will widen to 5.9 percent of gross domestic product this year from 5.8 percent in 2013, according to government forecasts.
The rand lost some of its earlier gains against the dollar after the data was released and traded 0.2 percent higher at 10.6364 as of 2:30 p.m. in Johannesburg.
Exports increased 6.8 percent in July to 85.4 billion rand as shipments of mineral products, which include coal and iron ore, surged 24 percent.
Imports jumped 15 percent to 92.3 billion rand. Purchases of mineral products, which include oil, increased 14 percent and vehicle components rose 23 percent.
The monthly trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.