Trade balance swings to unexpected surplus

SA’s trade balance swung to an unexpected surplus in September, signifying a recovery in commodity exporting countries in line with the World Bank’s projections.

Johannesburg - South Africa’s trade balance swung to an unexpected surplus in September, signifying a recovery in commodity exporting countries in line with the World Bank’s projections.

Data by the South African Revenue Service yesterday showed a trade surplus of R6.7 billion in September from a revised R8.9bn deficit in August.

Exports rose to 10.1 percent month on month' while the import bill fell by 6.6 percent month-on-month to R92.2bn in September, mainly due to decreases in imports of mineral products (-30 percent)), precious metals & stones (-66 percent), and vegetable products (-20 percent).

In turn, export revenues climbed by 5.6 percent on the back of increases in exports of precious metals and stones stones (37 percent), mineral products (11 percent), vehicle and transport equipment (13 percent), and chemical products (15 percent).

Hanns Spangenberg, an analyst at NKC African Economics, said the switch to a trade surplus was widely unexpected, particularly the size of the surplus, with the poll median coming in at a deficit of R1.1bn.

He said as a result, the domestic cumulative merchandise trade balance during the first nine months of 2016 amounted to a deficit of only R9.95bn, compared to a deficit of some R37.1bn during the same period last year.

“Looking ahead, the local unit remains vulnerable to a reversal of positive emerging market sentiment should the US Federal Reserve elect to recommence its interest rate tightening cycle in December and the possibility of a credit rating downgrade to sub-investment grade status,” Spangenberg said.

Annabel Bishop, chief economist at Investec, said as global growth and demand improves, demand for commodities would likely improve, raising prices, and so boosting export growth.

“The expected improvement in commodity prices in 2017 implies some strengthening in exchange rates for commodity exporters, and so some moderation in inflation in the next few years.

“The rand is expected to strengthen mildly, barring further political volatility.”

Standard Bank said: “The country has endured a number of tests this year, but has continued to persevere. We are committed to working through the current challenges to come out stronger in the end.”

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