South Africa’s trade balance swung into surplus in December from a R10,5-billion deficit the previous month, official data showed on Wednesday.
The surplus was far better than a Reuters survey forecast of a R2-billion deficit in December, although the data is volatile and unpredictable and December is traditionally a low import month.
The South African Revenue Service said exports fell by 11,6 % compared with the previous month, while imports fell sharply by 30,3%.
Analysts said the fall in exports and imports could largely be attributed to seasonal shutdowns during the holiday period, but the data was still better than expected.
”It’s much better than expected. It seems … all categories of imports recorded falls in imports. It’s quite positive data,” Absa capital interest rate strategist Nyiko Mageza said. ”We can’t say now how much of it is because December is usually a good trade month but the reaction is likely to be very positive from it,” he said.
South Africa recorded huge monthly trade deficits in 2006, which has weighed heavily on the current account of the balance of payments.
The cumulative deficit for the whole of 2006 tripled to R67,1-billion compared with a R22,04-billion shortfall the previous year.
The current account narrowed to 5,2% in the third quarter of 2006 from more than 6% of gross domestic product in the first quarter of the year.
But economists said the small surplus in December is unlikely to ease pressure on the balance of payments, which could widen in the fourth quarter.
”[The data] suggests the trend on the current account is still deteriorating, which will caution the Reserve Bank and prompt a further rise in interest rates,” Dave Mohr, economist at Citadel said.
The central bank is to meet to decide the next move on interest rates on February 14 to 15 after hiking the repo rate by 200 basis points to 9% last year. — Reuters