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The trade deficit narrowed in May – another sign South Africa’s trade performance is currently no cause for concern. The figures augur well for the current account deficit in the second quarter. The current account is the trade balance less net payments for “invisibles” – such as services, interest, freight and dividends. In 2007 and 2008 there was deep concern about the size of SA’s current account deficit.
CLOSER TO ZERO In May this year, SA’s trade balance recorded a deficit of R1,03bn – in line with market expectations. In April the trade balance was a deficit of R2,4bn and has recorded a deficit in four out of the past five months. The trade balance moved from a large deficit between 2006 and 2009 to a surplus in 2009/2010. The current trade deficit reflects the pick-up in economic activity.
EXPORTS RISE During May the value of exports jumped by an encouraging 9% month-on-month, after falling by 14,2% in April. The increase in exports – which was R4,6bn over the month – was mainly due to a rise in precious metal exports (+R1,8bn), base metal exports, mainly steel (+R1,2bn), vegetable exports (+R600m) and vehicle exports (+R500m). Footwear exports rose 53,9% month-on-month.
IMPORTS INCREASE In May, 20 out of the 22 major categories of imports rebounded after big falls in April due to the large number of public holidays. The strongest increase in imports was in the “fats and oils” category, followed by base metals, electrical equipment and “vehicles and parts”. By contrast, imports of mineral products – mainly oil – fell sharply over the month, down by 12%.
NO CAUSE FOR CONCERN SA’s current account deficit – the trade balance less net payments for “invisibles” – widened to 3,1% of gross domestic product in first quarter 2011 from 1% in fourth quarter 2010. At those levels there’s not yet cause for concern. Stanlib’s Kevin Lings says SA’s import intensity is likely to rise as domestic expenditure improves, which implies increased pressure over the next year.
CLOSER TO ZERO In May this year, SA’s trade balance recorded a deficit of R1,03bn – in line with market expectations. In April the trade balance was a deficit of R2,4bn and has recorded a deficit in four out of the past five months. The trade balance moved from a large deficit between 2006 and 2009 to a surplus in 2009/2010. The current trade deficit reflects the pick-up in economic activity.
EXPORTS RISE During May the value of exports jumped by an encouraging 9% month-on-month, after falling by 14,2% in April. The increase in exports – which was R4,6bn over the month – was mainly due to a rise in precious metal exports (+R1,8bn), base metal exports, mainly steel (+R1,2bn), vegetable exports (+R600m) and vehicle exports (+R500m). Footwear exports rose 53,9% month-on-month.
IMPORTS INCREASE In May, 20 out of the 22 major categories of imports rebounded after big falls in April due to the large number of public holidays. The strongest increase in imports was in the “fats and oils” category, followed by base metals, electrical equipment and “vehicles and parts”. By contrast, imports of mineral products – mainly oil – fell sharply over the month, down by 12%.
NO CAUSE FOR CONCERN SA’s current account deficit – the trade balance less net payments for “invisibles” – widened to 3,1% of gross domestic product in first quarter 2011 from 1% in fourth quarter 2010. At those levels there’s not yet cause for concern. Stanlib’s Kevin Lings says SA’s import intensity is likely to rise as domestic expenditure improves, which implies increased pressure over the next year.
