South Africa Posts Trade Deficit in October as Strong Rand Boosts Imports
South Africa posted a trade deficit of 3.2 billion rand ($449 million) in October, reversing its surplus the month before, as lower interest rates and a stronger rand helped spur imports.
The shortfall compared with a 3.6 billion rand surplus in September, the South African Revenue Service said in an e-mailed statement today. The median estimate of nine economists surveyed by Bloomberg was for a deficit of 2 billion rand.
South Africa’s Reserve Bank has cut its benchmark interest rate three times this year, most recently by half a point to 5.5 percent on Nov. 18, spurring consumer spending in Africa’s biggest economy. At the same time, the rand’s 7.3 percent gain against the dollar in the past six months has fueled demand for televisions, microwave ovens and other imported items.
The increase in “demand-driven goods is indicative of companies building up inventories,” Andrew Fisher, an executive at the revenue service, said by phone today.
Imports increased 7 percent to 53 billion rand in October from the previous month, with shipments of machinery and electrical appliances climbing 14 percent and vehicle imports increasing 32 percent, the revenue service said.
Exports dropped 6.3 percent to 49.8 billion rand over the same period. Iron-ore exports slumped 25 percent, while shipments of chemical products declined 18 percent, the revenue service said.
In the first 10 months of the year, the trade deficit narrowed to 13.2 billion rand from 26.7 billion rand in the same period last year, the report said.
South African trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.
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