South Africa Posts Trade Gap of 18.9 Billion Rand in SeptRene Vollgraaff
South Africa’s trade deficit was little changed in September from a seven-month high in the previous month as strikes curbed car and mining exports and oil imports swelled.
The gap of 18.9 billion rand ($1.9 billion) compares with 19.1 billion recorded in August, the Pretoria-based South African Revenue Service said in an e-mailed statement today. The median estimate of 12 economists in a Bloomberg survey was for the deficit to narrow to 16.4 billion rand.
Strikes halted production at carmakers, mines and building companies in the third quarter, cutting exports and undermining investors’ confidence in Africa’s largest economy. The trade deficit for the first nine months of the year was 126.4 billion rand, 51 percent bigger than it was in the same period in 2012.
“We had a huge collapse in vehicle exports for the month,” Matthew Sharratt, an economist at Bank of America Merrill Lynch in Cape Town, said in a phone interview. “Typically in September, over the last decade, you get a 2.5 billion rand improvement in the trade balance, but that seasonal effect was swamped by the collapse in vehicle exports.”
A worsening trade outlook may add to pressure on the current account and undermine the rand, which has lost 15 percent against the dollar this year, the worst performer among 16 emerging market currencies tracked by Bloomberg. The rand lost 0.3 percent against the dollar to 9.9735 as of 2:46 p.m. in Johannesburg. Yields on rand bonds due February 2023 climbed 5 basis points, or 0.05 percentage point, to 7.55 percent.
The deficit in the current account, the broadest measure of trade in goods and services, reached 6.5 percent of gross domestic product in the second quarter.
The third-quarter gap will look “possibly a little bit worse before you start to get some more notable improvements late in the year and then into early next year,” Sharratt said.
The National Treasury forecast in its mid-term budget report last week that the shortfall will average 6.5 percent this year, up from the 6.2 percent it forecast in February. The gap will probably narrow to 6.4 percent in 2014, the Treasury said.
Exports fell 6 percent in September to 66.5 billion rand, led by a drop of 4.4 billion rand, or 58 percent, in shipments of vehicles, aircraft and vessels. Precious and semi-precious stones and metals, which include gold and platinum, declined 2 billion rand, or 12 percent, according to the revenue service.
Imports decreased 4.9 percent to 85.5 billion as vehicles, aircraft and vessels fell 2.5 billion rand, or 27 percent, and base metals declined 23 percent. That offset a 14 percent increase in imports of mineral products, which includes oil.
South Africa relies on foreign investment in stocks and bonds to finance the shortfall on the current account. Those inflows have fluctuated this year as speculation about when the U.S. Federal Reserve will start reducing its $85 billion-a-month monetary stimulus program led investors to sell some riskier emerging-market assets.
The monthly trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.