Johannesburg - South Africa’s trade deficit narrowed to R1.0bn in May - in line with forecasts - from a R2.4bn shortfall, the South African Revenue Service (Sars) said on Thursday.
“The reduction in the trade deficit was underpinned by higher commodity exports, specifically precious and base metals,” Sars said.
Exports rose by 9% month-on-month in May while imports were up 6%. Economists surveyed by Reuters expected the trade account to register a R1bn shortfall in May.
Salomi Odendaal, economist at Citadel, said demand for commodities remains strong despite weaker growth in some parts of world.
“We expect imports to be fairly strong given that the rand is holding its own against other currencies. If local demand picks up and inflation remains relatively low as the rand is resilient, we may see a further pickup in imports so that the trade balance will worsen a bit.”
The trade account is expected to record deficits this year as the local economy recovers and imports rise. The surplus on the trade account narrowed to R22bn in the first quarter from R75.5bn in the fourth quarter.
The deficit on the current account widened to 3.1% of GDP in the first quarter from 1.0% gap in the fourth quarter partly due to a levelling off in the value of exports while imports jumped.
Deputy Finance Minister Nhlanhla Nene said on Wednesday the rand, which has gained about 30% to the dollar since beginning of 2009, was putting pressure on the current account leaving South Africa vulnerable to external shocks.
“The reduction in the trade deficit was underpinned by higher commodity exports, specifically precious and base metals,” Sars said.
Exports rose by 9% month-on-month in May while imports were up 6%. Economists surveyed by Reuters expected the trade account to register a R1bn shortfall in May.
Salomi Odendaal, economist at Citadel, said demand for commodities remains strong despite weaker growth in some parts of world.
“We expect imports to be fairly strong given that the rand is holding its own against other currencies. If local demand picks up and inflation remains relatively low as the rand is resilient, we may see a further pickup in imports so that the trade balance will worsen a bit.”
The trade account is expected to record deficits this year as the local economy recovers and imports rise. The surplus on the trade account narrowed to R22bn in the first quarter from R75.5bn in the fourth quarter.
The deficit on the current account widened to 3.1% of GDP in the first quarter from 1.0% gap in the fourth quarter partly due to a levelling off in the value of exports while imports jumped.
Deputy Finance Minister Nhlanhla Nene said on Wednesday the rand, which has gained about 30% to the dollar since beginning of 2009, was putting pressure on the current account leaving South Africa vulnerable to external shocks.