South Africa swings to trade surplus in September

South Africa’s trade balance swung back to a surprise surplus in September as exports jumped, but analysts said strong consumer demand ahead of Christmas is likely to push the balance back into deficit.

The South African Revenue Service on Friday said the trade account recorded a surplus of 3.6 billion rand in September compared with a 4.7 billion rand shortfall in August. Economists polled by Reuters had expected a 2.1 billion rand deficit.

SARS said exports jumped 9.6 percent in the month, boosted by minerals and metals, but imports fell 6.9 percent on lower demand for vehicles, aircraft, machinery and original equipment.

Analysts said the trade account, which logged its first surplus since July, may go back into deficit in the next few months on strong consumer spending.

“Clearly exports were strong in the month but whether this can be sustained is another issue, given the fact that the global economy is faltering,” said Isaac Matshego, economist at Nedbank.

“I expect imports to pick as we go towards Christmas and consumer spending increases,” he added.

The rand extended its gains after the data and was trading at 6.9420 to the dollar as of 1253 GMT, compared with 6.99 beforehand.

Interest rates are seen supporting household spending, as the central bank has cut its repo rate by a total of 600 basis points since December 2008 to a relatively low 6.0 percent.

The trade account registered a surplus of 13.2 billion rand in the second quarter, contributing to a narrowing of the current account deficit to 2.5 percent.

The National Treasury said in its three-year policy framework that a recovery in the economy should see the current account deficit widen in the medium term.

“South Africa seems to be leaning to a much smaller deficit than last year and exports continue to do fairly well considering the strength of the rand and global demand that’s not that strong at the moment,” said Salomi Ondendaal, an economist at Citadel.

“Imports are also going at quite a good rate of almost 10 percent, which confirms the local recovery is going ahead. It’s not boom time but the local recovery is on track,” Ondendaal added.

Source: Reuters