South Africa Halves Trade Deficit After Revisions to DataRene Vollgraaff
South Africa halved its trade deficit for the first nine months of 2013 after revising the data to include exports and imports from a customs union with neighboring countries.
The shortfall for January to September was lowered to 64.5 billion rand ($6.3 billion) from 126.4 billion rand, the South African Revenue Service said in an e-mailed statement today. The revisions take into account a trade surplus of 61.9 billion rand with Botswana, Lesotho, Namibia and Swaziland in the period, the agency said.
The rand climbed against the dollar after the statement was released, jumping about 1 percent to 10.17776, and was trading at 10.2214 as of 8:33 p.m. in Johannesburg. The currency of Africa’s largest economy has come under strain this year, falling 17 percent against the dollar, as a widening deficit increased South Africa’s vulnerability in financing the shortfall.
“The extent of the revision to the SARS data would at least be positive for the rand and therefore the local fixed-income market,” Carmen Nel, an economist at Rand Merchant Bank in Cape Town, said in a phone interview. “It will not improve the current-account deficit enough to ensure that South Africa is not viewed as a twin deficit economy.”
South Africa’s trade gap for 2012 was restated to 34.6 billion rand from 116.9 billion rand under the old accounting method, while the nation posted a surplus in the previous two years compared with deficits, the revenue service said. The September shortfall was revised to 12 billion rand from 19 billion rand, it said.
The deficit on the current account, the broadest measure of trade in goods and services, has been at 5 percent of gross domestic product or above that since the first quarter of 2012, contributing to a weaker rand. South Africa relies on foreign investment in bonds and stocks to help finance the current-account gap, inflows that have fluctuated this year as investors’ risk perception toward emerging markets changed.
“We are very suspicious of the timing now, when the government is very annoyed at its inclusion as a stressed country,” Peter Attard Montalto, an economist at Nomura Plc in London, said in an e-mail. “It's a particular surprise it's happened without any consultation or working papers or even mention by policy makers that actually trade numbers were better than they look.”
The revenue agency said the data was adjusted in consultation with the National Treasury and Reserve Bank, which will revise its balance of payments data in the Quarterly Bulletin, due for release on Dec. 3.
Botswana, Lesotho, Namibia and Swaziland, also known as the BLNS countries, and South Africa form the Southern African Customs Union, the oldest customs union in the world. South Africa had a surplus with the four nations of 82.3 billion rand last year and 68.6 billion rand in 2011, the revenue agency said.