The trade balance improved to a Rand 6.85 billion ($590.6m) surplus in December after a revised R5.27b shortfall in November, according to data released by the South Africa Revenue Service (Sars). This exceeded market expectations of R1.8b, Independent Online reported.
Exports rose by 3.8 percent or R3.23b to R87.49b while imports decreased by 9.9 percent or R8.89b to R80.49b. The data includes trade with Botswana, Lesotho, Namibia and Swaziland.
The December data brings the cumulative trade deficit for 2014 to R198.92b compared to R158.18b in 2013.
The overall improvement in exports was due to mineral and vegetable products, wood pulp and paper, and machinery and electronics. Import growth was contained in machinery and electronics, mineral products, equipment components and chemical products.
Bart Stemmet, an analyst at NKC Research, said December was only the third monthly trade surplus recorded during 2013 to 2014.
“While lower fuel prices will ease some pressure on the country’s trade balance, a large proportion of the South African export sector is unable to benefit fully from the weak rand due to structural challenges, including labor unrest and electricity blackouts.
In the meantime, the South African economy on an average continues to import more than it exports to the rest of the world.”
Nedbank economists Dennis Dykes and Isaac Matshego said the large trade surplus was in line with seasonal trends, as imports normally ease off in December after earlier pre-festive season buying.
Further Support
They said during 2015, exports were likely to improve as production activity was normalized, while the weakness of the rand exchange rate would add further support.
“However, electricity load shedding is likely to restrict volume growth in mining and manufacturing and this could inhibit export growth. In contrast, purchases of capital equipment for the infrastructure program will continue to prop up imports.”
Kamilla Kaplan, an Investec economist, noted that the effect of lower oil prices on the trade deficit has, however, been partially countered by increased fuel imports by Eskom, which had become increasingly reliant on diesel powered open cycle gas turbines (OCGTs) to ensure continuity of electricity supply.
She said by comparison, in October and November, the value of mineral imports rose 37.3 percent year on year and 10.8 percent year on year respectively.
Kaplan said sizeable trade deficits were likely to remain a feature in 2015. “The delay in synchronizing the first unit at the Medupi power station and maintenance backlogs will require ongoing usage of OCGTs, thereby keeping fuel imports elevated. The electricity system is expected to be severely constrained until April.”
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