South Africa recorded a deficit of R5,544-billion for its trade with non-Southern African Customs Union trading partners in October, after a R3,691-billion deficit in September, according to the latest Customs and Excise figures released on Wednesday.
The trade balance was expected to be a R2-billion deficit, according to a survey of economists. The range was from a R3,5-billion deficit to an R800-million surplus.
John Loos, economist at Absa, commented: “The deficit is obviously higher than expected. I do think this points to a widening of the current-account deficit — I don’t think the deficit will become a big problem, because for some years we will have ample capital to finance it.”
Said Magan Mistry, Nedcor economist: “The trade deficit was much wider than what the market had expected, as exports declined faster than imports. The cumulative trade deficit for the first 10 months of 2005 was R21,6-billion, compared with a trade deficit of R14-billion in the same period in 2004.
“The latest trade deficit is unlikely to affect Reserve Bank monetary policy. The trade deficit results in a current account deficit of 4% of gross domestic product [GDP]. We see the monetary policy committee (MPC) keeping rates unchanged in December.”
Shirheen Darmalingam, economist at Standard Bank, said: “The deficit was far larger than expected, which points to continued strong domestic demand. This is sucking in imports. The October foreign trade deficit could widen the current-account deficit to beyond 3,5% of GDP for this year, but with oil prices declining, we could see some narrowing in the trade deficit in future months.” — I-Net Bridge