South Africa’s November trade balance with its non-Southern African Customs Union (SACU) trading partners has come in at a deficit of R4,3-billion, compared to October’s deficit of R713-million, which was the first trade deficit since September 2002.
This is far worse than economists’ and analysts’ expectations — a poll by I-Net Bridge had predicted a median forecast of a R1,5-billion deficit in November due to the import of a Navy corvette and some aircraft. The range of forecasts was from a R500-million rand surplus to a R3-billion rand deficit.
The data brought South Africa’s cumulative trade surplus to R11,219-billion for the year to date compared with R33,308-billion in the first 11 months of 2002.
The trade data is renowned for being volatile and difficult to predict. However, in the wake of the stronger rand in 2003, the country’s trade surplus has been narrowing steadily over the year, with imports surging and exports faltering — the trade balance was at a R613-million surplus in September, a R1,431-billion surplus in August and a surplus of R2,847-billion in July.
Mike Schussler, an economist at stock broking group Tradek, commented: “This is not good news at all and it is an anticipated figure. Although one cannot read too much into only a month’s figure, if it carries on like this then I think we are heading for a huge current account deficit. This can’t be good for the bond market and might change the direction of the rand.”
When a country maintains a current account deficit that is not offset by similar levels of capital inflows, there is pressure on the currency to depreciate, which in turn sparks domestic inflationary concerns. These worries are reflected in the bond market, as yields rise and bond prices fall.
According to the latest Customs & Excise figures released on Tuesday, South Africa’s total exports fell by 16,4%, or R3,93-billion in November from October, while imports fell by 1,3% or R320,3-million. On a cumulative basis, exports are 13% lower for the period January to November 2003 compared to the year-earlier period, while imports are 6,1% lower.
Three aircraft with a total value of R1,7-billion rand were included as imports during the month, but it appears as though nothing was recorded for the import of the Navy’s first corvette, which arrived at the Simons Town naval base on November 4. Overall, the category for imports of vehicles, aircraft and vessels rose by R1,936-billion from October.
The other import category to experience a significant increase in November was mineral products, which rose by R1,14-billion.
Contributing to the 16,4% fall in exports were a R1,47-billion decline in exports of precious and semi-precious metals and stones, a R696-million fall in base metals, and a R585-million drop in mineral product exports. – I-Net Bridge