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SA records trade deficit for 2016 despite massive Dec surplus

Pretoria – Although South Africa recorded a surprise trade balance surplus of R12.04bn in December 2016, the year-to-date deficit for the whole of 2016 was R2.92bn, the SA Revenue Service (Sars) said on Tuesday.

These trade statistics for December 2016 include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).

According to Sars, the R12.04bn trade balance surplus for December 2016 is attributable to exports of R93.03bn and imports of R80.99bn. From November to December 2016 exports decreased by R6.03bn (6.1%) and imports decreased by R19.75bn (19.6%).

Exports for the year-to-date - 1 January to 31 December 2016 - grew by 5.8% from R1 036bn in 2015 to R1 096bn in 2016. Imports for the year-to-date have been worth R1 099bn. This is 1.0% more than the imports of R1 088bn recorded from January to December 2015.

On a year-on-year basis, December 2016’s R12.04bn trade balance surplus is an improvement from the surplus recorded in December 2015 of R7.04bn, according to Sars. Exports of R93.03bn are 6.3% more than the exports of R87.51bn recorded in December 2015. Imports of R80.99bn are 0.6% more than the imports of R80.47bn recorded in December 2015.

November 2016’s trade balance deficit was revised upwards by R0.59bn from the previous month’s preliminary deficit of R1.09bn to a revised deficit of R1.68bn. This is as a result of ongoing Vouchers of Correction (VOCs), explained Sars.

Standard Bank head of commercial banking Karl Gotte said the global economy faced enormous challenges in 2016 due to stagnant global trade, lower investment and increased policy uncertainty.

"Global growth is estimated to have slowed to 2.3% in 2016, the weakest performance since the global financial crisis. The World Bank mentions in its South Africa Economic Update that 2016 may mark the trough of South Africa’s business cycle and that a slight recovery is expected in 2017," said Gotte.

"This expectation is to be driven by rising commodity prices, increase in credit stimulating household demand as well as the lower inflationary pressures due to a more limited drought effect on food prices.”

He said SA needs to look into ways that stimulate exports as it has experienced a long period of stagnation.

“The retail conditions are expected to improve this year. Growth is expected from durable goods which are expected to grow by 1.5% year on year, with semi-durable goods expected to grow by 1% year on year. The slower economic growth by South Africa’s trading partners, lower economic growth as well as the debt squeeze on the public sector and households were highlighted as major causes for challenges within the trade sector in 2016,” said Gotte.

“Businesses are aiming to overcome the challenges that were faced in 2016. This is a good time for businesses to expand networks and broaden their knowledge on industry and customer information, expand the value chain and collaborate to make a bigger impact.”

Kevin Lings, chief economist at Stanlib, said SA’s trade balance has generally improved over the past year, at least on a trend basis, helped by a combination of slowing import growth and a pick-up in exports.

Higher international commodity prices have provided welcome relief to SA’s balance of payments in 2016.

"Unfortunately, the slowdown in import growth largely reflects the weakness in the SA economy, rather than an improvement in import substitution. This overall trend is expected to continue during 2017, which should help to further narrow SA’s current account deficit, reducing the pressure on the rand exchange rate," said Lings.

According to the Nedbank Group Economic Unit, trade figures will remain highly volatile due to both global and domestic factors. The unit said the figures are volatile and have no direct impact on monetary policy in the short term.

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