Surprise trade surplus lifts SA’s outlook
By Sunita Menon - Oct 1st 2018, 08:37
A surprise trade surplus in August bodes well for SA’s current account.
After July’s revised deficit of R5.29bn from R4.65bn, SA saw a surplus of R8.79bn in August, data from the SA Revenue Service (Sars) showed on Friday.
This is a stark contrast to the R1.8bn deficit expected by economists polled by Bloomberg. August also typically delivers a large deficit, which has averaged R5.6bn over the past seven years.
The numbers are notoriously volatile, but analysts say the trend points to a trade surplus for the year. A trade surplus eases pressure on the rand and SA’s current account.
"Hidden behind the major movements there is more evidence of the lagged impact of the weaker rand exchange rate on the trade account, with higher imports ... evident across many smaller sectors," said NKC economist Elize Kruger.
The rand has lost 14% against the dollar this year, which has raised the costs of imports.
The balance of trade indicates the difference in value between a country’s imports and exports. The current account is indicative of SA’s trade with the rest of the world. Compared with recent years, the deficit has narrowed significantly. The current account deficit averaged more than 5% of GDP between 2012 and 2015.
Data in September showed SA’s current account deficit narrowed in line with expectations in the second quarter of 2018 to 3.3% of GDP.
"The outlook for trade in 2018 still remains relatively favourable, though global trade conditions are showing signs of early weakness that may impact on exports."
"On the domestic front, some recovery in demand will keep import growth positive but modest," said Nedbank economist Isaac Matshego.
Import growth will be underpinned by the modest rebound in consumer spending, while the weaker rand exchange rate and higher international oil prices will raise the value of imports of mineral products, he said.
President Cyril Ramaphosa has revealed actions to reform legislation and regulations such as the Mining Charter and the rollout of broadband spectrum as part of his economic stimulus plan to reignite growth and foster investment.Business Live
Load shedding threatens jobs, economic recovery, says consumer body
22/03/2019 - 13:31
Load shedding, which has been escalated to Stage 4, is posing a significant risk to economic recovery, the Consumer Goods Council of South Africa said in a statement, as rotational blackouts continued to grip the country.
Retail sales recover in January after dismal December figures
22/03/2019 - 09:23
Retail spending showed signs of recovery in January, growing 1.2% on an annualised basis, slightly faster than analysts had expected.
SA beef export market reopens to the Middle East
22/03/2019 - 08:23
The recently held Gulfood Trade Show 2019, which took place at the Dubai World Trade Centre, saw the reopening of beef trade between South Africa and the Middle East.
Business counts cost as Eskom battles power shortages
20/03/2019 - 09:14
State utility Eskom will make more power cuts this week as it struggles with capacity shortages that threaten to stymie President Cyril Ramaphosa’s efforts to boost investments and economic growth.
SA meat price inflation to remain subdued due to foot-and-mouth outbreak
19/03/2019 - 11:27
SA’s meat price inflation could remain subdued in 2019 as a ban in exports could increase local supplies, according to the Agriculture Business Chamber (Agbiz), an organisation that represents commercial farmers and agribusiness.