South Africa recorded a deficit of R3,691-billion for its trade with non-Southern African Customs Union trading partners in September after a R3,243-billion deficit in August, according to the latest Customs and Excise figures released on Monday.
The balance was expected to narrow to a R1,5-billion deficit in September following August’s R3,243-billion deficit, according to a survey of economists. The range was from a R3-billion deficit to an R800-million deficit.
Mike Schussler, economist at T-Sec, said: “The trade figure is still in the range of expectations. I do believe that the number will not affect the rand and the bond market, because monthly trade figures are very volatile and the deficit could have been much higher.”
Commented Dawie Roodt, chief economist at the Efficient Group: “This is a bad number. One day we get a set of numbers that suggest that rates will not go up and another day we get one that suggests that rates will go up — this is one of the bad ones. Because it is such a volatile number, there is not likely to be market reaction to one set of data, but over time, if it persists, it will be negative for the market.”
The deficit was wider than expected, said George Glynos, market analyst at Econometrix Treasury Management, and a “clear indication that the higher price of oil and consumer spending has resulted in the very strong rise in the trade deficit”.
“The trade deficit also makes the rand vulnerable to sentiment toward South African financial markets, with the current account deficit being propped up by foreign inflows into the JSE and the bond market,” said Glynos.
Nyiko Mageza, economist at Absa, commented: “The numbers are worse than expected; there could have been one-off items that affected the import figure, otherwise it’s a bad figure.
“Imports grew faster than exports and that’s also bad for the current account. The rand has weakened a bit over the past few months, but this won’t retard import growth and stimulate export growth which would then widen the [export/import] imbalance. There is a sign of concern that the economy is overheating, and this is the largest deficit this year.” — I-Net Bridge