South Africa recorded a deficit of R4,219-billion for its trade with non-Southern African Customs’ Union trading partners in June after a deficit of R7,005-billion in May, according to customs and excise figures released on Monday.
The trade balance was expected to have narrowed to a R2,5-billion deficit in June from the shock R7,005-billion deficit in May, a survey of economists by I-Net Bridge has found.
Forecasts ranged from a R3,5-billion deficit to a R2-billion surplus.
Mike Schussler, an economist at T-Sec, said: “This is still very much higher than the market expected and it is really worrisome. Higher commodity prices should have seen some increase on exports — so this is really worrisome.”
“These numbers suggest trade is taking longer to turn around than expected as a momentum of imports has been built up,” said Chris Hart, senior treasury economist at Absa: “It suggests the authorities still need to take very strong supply side measures i.e. to boost supply to meet demand.”
Dawie Roodt, chief economist at the Efficient Group said: “The number was worse than expected. With the change in interest rates, it will take some time before we see improvement in the form of lower credit demand and hopefully lower import demand as well.
“This is worse than expected and the current-account deficit is definitely a problem in South Africa. It’s like turning an oil tanker around — it takes some. Hopefully the numbers will improve over the next couple of months, but it will take some time before we see an improvement on the current account.”
Magan Mistry, economist at Nedbank, had the following to say: “The deficit was larger than what the market had expected. The trade deficit suggests a wider current-account deficit. The trade deficit provides no comfort to the monetary authorities, which are likely to hike interest rates by 50 basis points in August.
“Given the deterioration in the inflation outlook and expectations since the last meeting, the Monetary Policy Committee is likely to hike rates by 50 basis points at its August meeting.” — I-Net Bridge