SA February trade deficit widens as imports rise

South Africa’s trade deficit widened in February, data showed on Wednesday, reflecting a rise in imports as the economy recovers from last year’s downturn.

A deterioration in the trade balance from a near-balance in 2004 has contributed to South Africa’s current-account deficit, in turn weighing on the rand currency.

But the shortfall has been lower than usual over the past year as the first recession in nearly two decades kept imports depressed.

The South African Revenue Service said the trade shortfall widened to R5,7-billion in February from a R3,33-billion shortfall in January, as imports of mineral products, vehicles and aircraft rose.

The trade number is generally volatile and difficult to forecast, with economists polled by Reuters having predicted a deficit of R2,5-billion.

“It’s definitely a disappointing figure, which is maybe a sign that imports are reviving faster than had gone so far. I think it points to the fact that at some point we’re going to have a widening of the current-account deficit as the economy recovers,” said Citi economist Jean-Francois Mercier.

“It might dampen a little bit the confidence in the rand in the past few weeks, it might check a little bit the upward momentum in the currency.”

Compared with the previous month, exports were up 10,06% while imports increased by 14,96%, Sars said.

South Africa’s account-deficit narrowed to 2,8% of GDP in the fourth quarter of 2009, its lowest level in four-and-a-half years, from a shortfall of 3,1% in the previous quarter. – Reuters

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