Trade balance swings to unexpected surplus

South Africa’s trade balance swung to an unexpected surplus in September, signifying a recovery in commodity exporting countries in line with the World Bank’s projections.

Data by the South African Revenue Service yesterday showed a trade surplus of R6.7 billion in September from a revised R8.9bn deficit in August.

Exports rose to 10.1 percent month on month while the import bill fell by 6.6 percent month-on-month to R92.2bn in September, mainly due to decreases in imports of mineral products (-30 percent), precious metals & stones (-66 percent), and vegetable products (-20 percent).

In turn, export revenues climbed by 5.6 percent on the back of increases in exports of precious metals and stones stones (37 percent), mineral products (11 percent), vehicle and transport equipment (13 percent), and chemical products (15 percent).

Hanns Spangenberg, an analyst at NKC African Economics, said the switch to a trade surplus was widely unexpected, particularly the size of the surplus, with the poll median coming in at a deficit of R1.1bn.

He said as a result, the domestic cumulative merchandise trade balance during the first nine months of 2016 amounted to a deficit of only R9.95bn, compared to a deficit of some R37.1bn during the same period last year.

“Looking ahead, the local unit remains vulnerable to a reversal of positive emerging market sentiment should the US Federal Reserve elect to recommence its interest rate tightening cycle in December and the possibility of a credit rating downgrade to sub-investment grade status,” Spangenberg said.

Annabel Bishop, chief economist at Investec, said as global growth and demand improves, demand for commodities would likely improve, raising prices, and so boosting export growth.

“The expected improvement in commodity prices in 2017 implies some strengthening in exchange rates for commodity exporters, and so some moderation in inflation in the next few years.

“The rand is expected to strengthen mildly, barring further political volatility.”

Standard Bank said: “The country has endured a number of tests this year, but has continued to persevere. We are committed to working through the current challenges to come out stronger in the end.”

The South African Revenue Service (SARS) has released trade statistics for September 2016 recording a trade balance surplus of R6.70 billion. The year-to-date deficit (01 January to 30 September 2016) of R9.95 billion is an improvement on the deficit for the comparable period in 2015 of R37.19 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).

In line with international statistical best practice, the Trade Statistics published by the South African Revenue Service (SARS) are subject to revisions as new information becomes available on an ongoing basis. The February 2016 to July 2016 export figures have been adjusted by R23.9 billion resulting in the year- to- date trade balance being revised downwards from a R7.41 billion trade surplus published in August 2016 to a R9.95 billion trade deficit in September 2016.

The R23.9 billion adjustment is as a result of revisions to the gold exports by the South African Reserve Bank (SARB) which supplies the gold export data to SARS. These gold revisions (for the first half of 2016) have been disclosed by SARB in the September 2016 Quarterly Bulletin. The revisions relate mainly to adjustments made for gold that was moved to facilities outside South Africa but with ownership of the gold retained by South African entities.

Including trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)

The R6.70 billion trade balance surplus for September 2016 is attributable to exports of R98.92 billion and imports of R92.22 billion. Exports for the year-to-date (01 January to 30 September) grew by 5.8% from R770.20 billion in 2015 to R815.24 billion in 2016. Imports for the year-to-date of R825.19 billion are 2.2% more than the imports recorded in January to September 2015 of R807.39 billion.

On a year-on-year basis, September 2016’s R6.70 billion trade balance surplus is an improvement from the deficit recorded in September 2015 of R2.20 billion. Exports of R98.92 billion are 8.8% more than the exports recorded in September 2015 of R90.93 billion. Imports of R92.22 billion are 1.0% less than the imports recorded in September 2015 of R93.13 billion.

August 2016’s trade balance deficit was revised upwards by R0.32 billion from the previous month’s preliminary deficit of R8.56 billion to a revised deficit of R8.88 billion as a result of ongoing Vouchers of Correction (VOC’s). Exports increased from August 2016 to September 2016 by R9.05 billion (10.1%) and imports decreased from August 2016 to September 2016 by R6.53 billion (6.6%).

Trade highlights by category

The main month-on-month export movements (R’ million)

The main month-on-month import movements (R’ million)

Trade highlights by world zone

The world zone results from August 2016 (Revised) to September 2016 are given below.

Africa:

Trade Balance surplus: R19 437 million – this is a 32.9% increase in comparison to the R14 624 million surplus recorded in August 2016.

America:

Trade Balance deficit: R650 million – this is an 85.9% decrease in comparison to the R4 608 million deficit recorded in August 2016.

Asia:

Trade Balance deficit: R12 196 million – this is a 27.0% decrease in comparison to the R16 709 million deficit recorded in August 2016.

Europe:

Trade Balance deficit: R3 812 million – this is a 43.1% decrease in comparison to the R6 702 million deficit recorded in August 2016.

Oceania:

Trade Balance surplus: R 11 million – this is an 86.7% decrease in comparison to the R83 million surplus recorded in August 2016.

Excluding trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)

The trade data excluding BLNS for September 2016 recorded a trade balance deficit of R3.05 billion. This was a result of exports of R86.32 billion and imports of R89.37 billion.

Exports increased from August 2016 to September 2016 by R9.01 billion (11.7%) and imports decreased from August 2016 to September 2016 by R6.34 billion (6.6%).

The cumulative deficit for 2016 is R89.22 billion compared to R115.72 billion in 2015.

Trade highlights by category

The main month-on-month export movements (R’ million)

The main month-on-month import movements (R’ million)

Trade highlights by world zone

The world zone results for Africa excluding BLNS from August 2016 (Revised) to September 2016 are given below.

Africa:

Trade Balance surplus: R9 690 million – this is an 89.9% increase in comparison to the R5 102 million surplus recorded in August 2016.

Botswana, Lesotho, Namibia and Swaziland (Only)

Trade statistics with the BLNS for September 2016 recorded a trade balance surplus of R9.75 billion. This was a result of exports of R12.59 billion and imports of R2.84 billion.

Exports increased from August 2016 to September 2016 by R0.04 billion (0.3%) and imports decreased from August 2016 to September 2016 by R0.19 billion (6.2%).

The cumulative surplus for 2016 is R79.27 billion compared to R78.53 billion in 2015.

Trade Highlights by Category

The main month-on-month export movements (R’ million)

The main month-on-month import movements (R’ million)