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SA's trade deficit narrows

Jun 29 2012 14:33 Reuters

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Johannesburg - South Africa’s trade deficit narrowed to R8.9bn in May from a R9.9bn shortfall in April, the South African Revenue Service said on Friday.

“The (lower) trade deficit ... was mainly due to increased exports of precious and semi-precious stones, mineral products and machinery and electrical appliances and increased imports of mineral products and machinery and electrical appliances,” Sars said.

Exports rose by 20.4% month-on-month to R62.8bn in May while imports increased by 15.6% to R71.7bn, Sars data showed.

Economists surveyed by Reuters expected a shortfall of R5.4bn for May but the data is volatile and hard to forecast.

Said Standard Chartered analyst Razia Khan: “The expectation had been that after a few months of very negative data, we were overdue some sort of correction...not so. South African trade comes in worse than expected - and following on from last week’s current account deficit release, which also surprised negatively, it will weigh on sentiment.

“Not only was Q1 a bad quarter for trade, Q2 looks like it may be even worse.

“The contrast with the same period last year is telling. Of course, dividend outflows also had a significant role to play in the Q1 current account deficit widening.

“And while the trade data does not usually move the market, and the rand is influenced (more positively) by bigger factors today, the emerging trade picture cannot be shrugged off entirely.”

Market reaction

The rand was firmer at R82264 against the dollar at 12:13 GMT, mainly tracking a stronger euro, from R8.2399 before the data was released at 12:00 GMT. The yield on the 2015 bond was steady at 6.01% as was that for the 2026 issue at 7.945%.

The trade account recorded its first annual surplus in seven years in 2010 but swung back into deficit last year as rising imports outweighed export receipts.   

This weighed on the current account, which widened to 3.3% of GDP in 2011 from 2.8% in 2010, but is starting to train its sights on its poor but fast-growing African cousins as turmoil in Europe slashes exports to its traditional markets.

 
imports  |  trade  |  exports  |  sa economy  |  trade deficit
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