Advertise with fastmoving.co.za
 
 

As SA records its biggest trade deficit in 10 months, economists warn that trade tensions could keep the trade account in the negative for the next few months.
As SA records its biggest trade deficit in 10 months, economists warn that trade tensions could keep the trade account in the negative for the next few months.

Rising imports push trade balance deficit to biggest in 10 months

ECONOMIC NEWS

By Sunita Menon - Dec 4th 2018, 08:07

As SA records its biggest trade deficit in 10 months, economists warn that trade tensions could keep the trade account in the negative for the next few months. 

SA recorded a trade deficit of R5.5bn in October, attributable to exports of R122.32bn and imports of R127.87bn, data from the SA Revenue Service showed. This is the first of the data from the fourth quarter, which could see the current account widen.

The balance of trade is an indicator of the difference in value between the country’s imports and exports and dictates SA’s current account, which is indicative of SA’s trade with the rest of the world.

SA has recorded a trade deficit for the past three months, mainly as a result of an acceleration in import demand. “The dismal trade performance in 2018 is one of the major disappointments of what turned out to be a difficult year for SA,” said NKC economist Elize Kruger.

Despite the resilience of the global economy and a notable depreciation in the rand exchange rate, SA exporters were unable to benefit meaningfully, while imports continue to outperform despite a low economic growth environment, she said.

The figures are notoriously difficult to predict and analysts stress that it is important to look at trends. “On a trend basis, SA’s trade balance remains in surplus but the extent of the surplus has narrowed significantly in recent months,” said Stanlib chief economist Kevin Lings.

However, Investec economist Lara Hodes warns that the current account could be in the red for at least the next quarter. “Looking forward, an elevation in trade tensions could further dampen global trade activity, and while import growth will likely be restricted by the moderation in the international oil price and restrained rates of domestic consumption, we could see the trade account continue to record a deficit position,” she said.

While net trade was a notable positive contributor to second quarter GDP, the trade account’s contribution is likely to be neutral in the third quarter, while the weaker trade performance will also put further pressure on the balance of the current account, said Kruger.

This comes ahead of the third-quarter current account figures, which are expected to show a wider budget deficit. This would be the third consecutive quarter that showed a deficit.
Business Live 

Read more about: trade | sa economy | rand | imports | global economy | exports

Related News

SA expected to sow fewer maize hectares than in previous seasons
26/11/2019 - 10:06
South African farmers are expected to sow 2.8% fewer hectares of the food staple maize next season than forecast in October after the planting season was delayed by rains, a Reuters survey of analysts showed.

Processed meats units continue to take toll on Tiger Brands
22/11/2019 - 15:10
Food producer Tiger Brands, which is still reeling from the backlash of the listeriosis crisis, said the slow recovery in its value-added meats businesses ensured operating income fell by a fifth in its year to end-September.

The clever shift SA's economy can make: economist
13/11/2019 - 13:29
Finance minister Tito Mboweni’s medium-term budget gave a blunt presentation of the financial issues facing South Africa and it is clear that government has finally come to grips with reality, says Efficient Group economist Francois Stofberg.

Billions in investments flow in to improve SA's economy
13/11/2019 - 11:30
More businesses have pledged billions of rands in investment to the ailing South African economy at the second investment conference in Sandton.

South Africa is emerging as a new hub for Retail Forex Trading
13/11/2019 - 10:16
South Africa's financial market is said to be the most developed & organized in Africa led by big Banks like Standard Bank, ABSA, FNB, FirstRand, Nedbank & local Stock Exchange (JSE) which is the largest stock market in Africa with daily trading volume of R23.7 Billion.