SA’s trade account swings to ­a deficit

South Africa’s trade account swung to a deficit in October, but the shortfall was lower than forecast as exports performed better than expected.

Data from the SA Revenue Services (SARS) showed on Wednesday that the trade balance switched to R4.41 billion in October from a revised R6.9 billion surplus in September. But SARS said exports fell 11.1 percent on a month-on-month basis, while imports were up 0.4 percent.

The news rattled the rand with the currency dropping from an opening of R13.8667 to R14.0331 by 5pm.

The year to date deficit of R14.35 billion is an improvement from the comparable period last year of R59.5 billion.

John Cairns at Rand Merchant Bank said October saw the worst trade balance of the year thanks to Christmas-related imports.

Nedbank said these figures suggested the weaker rand supported exports while dampening imports. “The rand faces pressures from both the global and domestic fronts, with the US interest rate hike and the uncertain policies of the incoming administration likely to put emerging markets under pressure.”

The bank said imports of capital equipment would also remain weak as the private sector remained cautious about committing to large expansion projects.

“Global conditions remain lacklustre, which with low commodity prices, will hamper export performance in the short term,” Nedbank said. “Import growth is also likely to be modest as household demand will be hurt by weak confidence, as well as high inflation and debt service costs.”

Trade performance

Elize Kruger, an analyst at NKC African Economics, said monthly trade statistics were volatile, but the cumulative picture suggested an improved trade performance in the first 10 months of this year.

“The narrower trade deficit reflects the benefit from a weaker rand exchange rate during the past 12 to 18 months, the moderate recovery in commodity prices, as well as the dismal domestic demand that inhibits imports during 2016.”

She said an improving trade balance would feed into a lower current account deficit this year. “We forecast a current account deficit of 4 percent of (gross domestic product) for 2016 compared to 4.3 percent in 2015.”

Investec economist Kamilla Kaplan said subdued domestic economic activity suppressed import growth. She said although export demand had been comparatively stronger, there were downside risks to South Africa’s potential export growth trajectory.

“Depressed business confidence has been reflected in the retrenchment in private sector investment rates. On a quarter-on-quarter seasonally adjusted annualised basis, private investment fell by 3.1 percent, following a decline of 13.3 percent in the first quarter of 2016,” Kaplan said.

She said similarly, household consumption expenditure contracted 1.7 percent in the first quarter and rose by just 1 percent in the second quarter, compared with the increase of 1.7 percent last year.

“The Reserve Bank expects consumers to remain under pressure for some time.”

She said these risks were associated with the modest global growth outlook and weak global trade momentum.

The South African Revenue Service (SARS) has released trade statistics for October 2016 recording a trade balance deficit of R4.41 billion. The year-to-date deficit (01 January to 31 October 2016) of R14.35 billion is an improvement on the deficit for the comparable period in 2015 of R59.50 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).

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

The R4.41 billion trade balance deficit for October 2016 is attributable to exports of R88.19 billion and imports of R92.60 billion. Exports for the year-to-date (01 January to 31 October) grew by 5.6% from R855.25 billion in 2015 to R903.42 billion in 2016. Imports for the year-to-date of R917.76 billion are 0.3% more than the imports recorded in January to October 2015 of R914.75 billion.

On a year-on-year basis, October 2016’s R4.41 billion trade balance deficit is an improvement from the deficit recorded in October 2015 of R22.35 billion. Exports of R88.19 billion are 3.7% more than the exports recorded in October 2015 of R85.04 billion. Imports of R92.60 billion are 13.8% less than the imports recorded in October 2015 of R107.39 billion.

September 2016’s trade balance surplus was revised upwards by R0.25 billion from the previous month’s preliminary surplus of R6.70 billion to a revised surplus of R6.95 billion as a result of ongoing Vouchers of Correction (VOC’s). Exports decreased from September 2016 to October 2016 by R10.97 billion (11.1%) and imports increased from September 2016 to October 2016 by R0.39 billion (0.4%).

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 September 2016 (Revised) to October 2016 are given below.

Africa:

Trade Balance surplus: R20 086 million – this is a 4.0% increase in comparison to the R19 322 million surplus recorded in September 2016.

America:

Trade Balance deficit: R2 165 million – this is a deterioration in comparison to the R636 million deficit recorded in September 2016.

Asia:

Trade Balance deficit: R16 712 million – this is a 42.1% increase in comparison to the R11 759 million deficit recorded in September 2016.

Europe:

Trade Balance deficit: R9 788 million – this is a 151.2% increase in comparison to the R3 896 million deficit recorded in September 2016.

Oceania:

Trade Balance deficit: R149 million – this is a deterioration in comparison to the R10 million surplus recorded in September 2016.

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

The trade data excluding BLNS for October 2016 recorded a trade balance deficit of R13.92 billion. This was a result of exports of R75.70 billion and imports of R89.62 billion.

Exports decreased from September 2016 to October 2016 by R10.87 billion (12.6%) and imports increased from September 2016 to October 2016 by R0.26 billion (0.3%).

The cumulative deficit for 2016 is R103.12 billion compared to R147.81 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 September 2016 (Revised) to October 2016 are given below.

Africa:

Trade Balance surplus: R10 574 million – this is a 10.4% increase in comparison to the R9 576 million surplus recorded in September 2016.

Botswana, Lesotho, Namibia and Swaziland (Only)

Trade statistics with the BLNS for October 2016 recorded a trade balance surplus of R9.51 billion. This was a result of exports of R12.49 billion and imports of R2.98 billion.

Exports decreased from September 2016 to October 2016 by R0.10 billion (0.8%) and imports increased from September 2016 to October 2016 by R0.13 billion (4.7%).

The cumulative surplus for 2016 is R88.77 billion compared to R88.30 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)