South Africa’s trade deficit widened to R15.02-billion in April, from R7.8-billion in March, with exports of R65.43-billion and imports of R80.45-billion during the month, the South African Revenue Service (Sars) said on Friday.
The trade deficit exceeded the consensus forecast of R9.5-billion.
The latest trading figures showed a 3% increase in exports, compared with March, and a 12.1% growth in imports over the same period.
Sars indicated that the month-on-month growth in goods imports mainly reflected a 22% increase in mineral products to R19.49-billion and a 20% increase in plastics and rubber to R3.27-billion, while other significant contributors were base metals and machinery, electrical appliances and original-equipment components.
On the export front, the March-to-April hike ingoods exports chiefly reflected increases in mineral products, which rose by 4% to R17.39-billion, and base metals and articles thereof that increased by 10% to R87.04-billion.
The cumulative deficit for 2013 was R57.01-billion compared with R36.62-billion in 2012.
Banking firm Nedbank’s economic unit commented that the country’s export performance was likely to remain weak for the remainder of year, as strike activity and infrastructure backlogs interrupted local production.
The firm also projected global demand conditions to continue its unfavourable streak, while commodity prices remained depressed. It expected imports to rise further, owing to capital equipment purchases, as the government's infrastructure development programme progressed.
“Persistent large trade deficits, together with the recent increase in the volatility of portfolio transactions will heighten concerns about financing the current account deficit. This could exert further downward pressure on the rand, and therefore increase upside risks to inflation, with the consumer price index [CPI] just below the upper end of the South African Reserve Bank's [SARB’s] target range,” the firm stated.
Nedbank added that SARB was likely to continue its accommodative monetary policy stance well into 2014, as economic growth remained weak and significant downside risks persisted.
“We believe that the Monetary Policy Committee will keep interest rates unchanged until the second half of 2014,” it added.
Investec group economics economist Annabel Bishop noted that the rand/dollar exchange rate jumped from R10.1608/$ to R10.22/$ on news of the worse-than-expected trade figures.
“The recent rand depreciation, led by labour disruptions; announced increased State control and intervention in the economy, likely load shedding and Eskom’s hedging activities will push up inflation in the next few months and extend the period in which CPI inflation is likely to return to the inflation target range from the third quarter of this year to the fourth quarter of 2013," she said.
Bishop further stated that the rand’s recent weakness would also slow the pace at which CPI inflation fell, elevating it over the next 12 months.
“The fourth quarter of this year currently falls within the 6- to 24-month inflation targeting period and so argues against the SARB easing interest rates. Additionally, any interest rate cuts will erode the carry trade differential foreigners enjoy in investing in South African rand-denominated debt, which would cause foreign sell off of South African gilts, should it occur,” she indicated.