The deficit on South Africa’s trade account narrowed sharply in 2009 compared with the previous year due to a recession that slashed imports, official data showed on Friday.
The South African Revenue Service said the trade deficit for 2009 narrowed to R25,84-billion from a R71,63-billion gap the previous year, easing pressure on the country’s current account, previously a drag on the rand and economy as a whole.
For December, the trade account recorded a surplus of R3,7-billion compared with a R2,47-billion deficit in November as imports fell by 13,73% in the month and exports eased by 1,08%.
The trade number is generally volatile and difficult to forecast. Economist polled by Reuters predicted an R800-million deficit for December.
“The trade balance typically improves in December, as import activity winds down. This looks to have been the case this time around as well,” said Razia Khan, head of macroeconomics and Africa research at Standard Chartered.
“As much as the improvement in the trade balance overall is good news … it mostly reflects the weakness of the economy. As the economy recovers [very slowly] the trade balance should worsen again. But given the weakness of consumer demand, do not expect that to happen in a very dramatic way just yet.”
South Africa’s economy came out of its first recession in almost two decades in the third quarter of 2009, supported by the manufacturing sector as exports recovered in line with the global economy.
But the recovery is expected to be slow as heavily indebted consumers continue to be under pressure after the recession slashed about a million jobs.
Weak spending, and the better trade balance, helped narrow the deficit on the current account to 3,2%t of GDP in the third quarter of last year, its lowest level in four years. — Reuters