South Africa recorded a deficit of R3,898-billion for its trade with non-Southern African Customs Union trading partners in February after a record deficit of R7,668-billion in January, according to the latest Customs & Excise figures released on Friday.
South Africa was expected to report a R2-billion rand deficit in February after January’s record R7,668-billion deficit.
The range was from a R3-billion deficit to a R3-billion surplus. In February 2005 there was a R123-million deficit.
Mike Schussler, economist at T-Sec, commented: “With all these high deficits over the last few months, it is going to start impacting on the currency at some stage. It can’t be good for the rand and it can’t be good for the bond market because it’s no longer a one-off figure but an ongoing trend, with December being the only exception.”
Said Michael Keenan, market analyst at ETM: “The deficit of R3,898-billion for February is very wide and the current-account deficit continues to widen. The current-account deficit continues to be a structural impediment for the rand to firm further despite the strength in precious metals.
“However, I think the latest trade figures are unlikely to move the rand, with the market awaiting United States data this afternoon.”
Shireen Darmalingam, economist at Standard Bank, said: “This was not in line with what we expected, but then again, trade figures are usually volatile. The rand firmed against the pound and the euro, on average, but it weakened against the dollar and so that helped the importers. Moving along to the current account — I don’t think it’s going to narrow materially from last year’s 4,2 as a percentage of the GDP [gross domestic product].”
“Another massive trade deficit for the second consecutive month,” said Magan Mistry, economist at Nedbank. “At this rate, the current account of the balance of payments is likely to be in deficit for the first quarter of 2006.
“This is a key concern of the South African Reserve Bank. The balancing of imports and exports is unlikely this year or next year, with the economy growing, growth in imports will outpace exports. For now, the current-account deficit is being financed by capital inflows.” — I-Net Bridge