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Exports down more than 25% for third quarter - StatsSA

Johannesburg – Net exports took a dramatic turn from the second quarter of the year, recording a R44bn trade deficit in the third quarter, compared to the previous quarter’s surplus of R14.6bn.

According to data released by Statistics South Africa (StatsSA) on Tuesday, exports decreased by 26.4% and imports decreased by 4.9%. Essentially, net exports contributed -7.5% to GDP growth, compared to the second quarter’s contribution of 6.7%. GDP growth for the third quarter was a mere 0.2%. 

READ: Further drop in GDP growth

“This is likely to result in a widening of the current account deficit,” stated Momentum Investments economist, Sanisha Packirisamy.

A more competitive currency could lead to a recovery in the trade deficit, she explained. However the net income deficit, may limit the recovery to the current account deficit. This is due to interest and coupon payments made to foreign holders of South African bonds and equities, explained Packirisamy.  

“We [MMI] expect the current account deficit to average close to 4% between 2016 and 2018, roughly in line with its longer-term average,” she stated.      

According to the report, the decline in exports was due to a drop in precious metals and transport exports. The suppressed commodity cycle and manufacturing sector which is also under pressure, also contributed to the decline, explained economist Dawie Roodt. The manufacturing sector declined by 3.2% in the third quarter, according to StatsSA.

The decline in imports, which has been ongoing for four consecutive quarters, has been driven by dwindling consumer demand. “Consumers are spending less and demanding less imports,” added Mamello Matikinca, FNB economist. If imports continue to contract and if exports pick up then the current account deficit will narrow. 

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