Trade account picture 'improving'
1 June 2009
The economic slowdown was having an unexpectedly beneficial effect on South Africa's trade account, economists said after the country returned favourable trade figures for the third month in a row in April.
South Africa's trade deficit widened from R512-million in March to R1.456-billion in April, but was still lower than expected. Economists had forecast a deficit of R3-billion.
Exports decreased by 21.76 percent compared to March, mainly due to a decline in the export of precious metals, the SA Revenue Service (Sars) said in a statement on Friday.
Imports dipped by 19.75 percent, on declines in the value of shipments of vehicles and aircraft and mineral products, Sars said.
RMB currency strategist John Cairns said the April figures were, for the third time in a row, "very positive for the rand".
He said April's deficit was slightly larger than the R0.5-billion deficits seen in previous months, "but much smaller than the average R5.6-billion deficits seen throughout 2008".
Cairns noted that trade data was very volatile, and it was never worth putting too much emphasis on one month's data.
"But three consecutive favourable figures in a row, is another story," Cairns said.
"Quite simply, it seems that the very rapid economic slowdown, combined with the effects of last year's currency weakness, is actually acting to improve the trade account," he added.
RMB's expectation had been a worsening in the trade account given that commodity prices were much lower this year than last and the South African economy, in general, was holding up better than most.
"This is apparently not the case," Cairns said.
"Combine the better than expected trade performance and the very weak first quarter 2009 economic growth performance, and it starts to become clear that the current account is probably improving faster than we had anticipated."
He said RMB's forecast of a six percent current account deficit in 2009 appeared too large and would have to be reduced.
"This is of course very positive for the rand," Cairns said.
Sapa
