JOHANNESBURG: South Africa’s trade account swung to a deficit in October, but the shortfall was lower than forecast as exports performed better than expected. Data from the SA Revenue Services (SARS) showed on Wedesday that the trade balance switched to R4.41 billion in October from a revised R6.9 billion surplus in September. But SARS said exports fell 11.1 percent on a month-on-month basis, while imports were up 0.4 percent. The news rattled the rand with the currency dropping from an opening of R13.8667 to R14.0331 by 5pm. The year to date deficit of R14.35 billion is an improvement from the comparable period last year of R59.5 billion.
John Cairns at Rand Merchant Bank said October saw the worst trade balance of the year thanks to Christmas-related imports. Nedbank said these figures suggested the weaker rand supported exports while dampening imports. “The rand faces pressures from both the global and domestic fronts, with the US interest rate hike and the uncertain policies of the incoming administration likely to put emerging markets under pressure.”
The bank said imports of capital equipment would also remain weak as the private sector remained cautious about committing to large expansion projects. “Global conditions remain lacklustre, which with low commodity prices, will hamper export performance in the short term,” Nedbank said. “Import growth is also likely to be modest as household demand will be hurt by weak confidence, as well as high inflation and debt service costs.”
