South Africa Records Trade Surplus
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South Africa’s trade deficit turned into a trade surplus for the first time in 10 months in December 2014. Exports increased while imports of both machinery and oil declined.
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Exports and Imports
In an e-mail from the Pretoria-based South African Revenue Service, the trade surplus stood at 6.8 billion rand ($586 million US) compared to a revised shortage of 5.3 billion rand back in November. The average estimate from 14 economists was for a surplus of roughly 1.8 billion rand.
South Africa’s trade deficit turned into a trade surplus for the first time in 10 months in December 2014. Exports increased while imports of both machinery and oil declined.
Exports and Imports
In an e-mail from the Pretoria-based South African Revenue Service, the trade surplus stood at 6.8 billion rand ($586 million US) compared to a revised shortage of 5.3 billion rand back in November. The average estimate from 14 economists was for a surplus of roughly 1.8 billion rand.
Since June of 2014, global crude-oil prices have spiraled downwards by more than half. South Africa imported 19% less crude in December compared to the previous month. Estimates predicted this would help lower the country’s import bill and relieve pressure on the rand. An economist at ETM Analytics in Johannesburg stated that the nation had large infrastructural energy needs that could potentially offset the impact of much lower oil prices.
Widening Trade Deficits
Throughout 2014, South Africa ran a trade deficit of more than 95 billion rand, one-third higher than in 2013, according to the revenue service. He further mentioned that there was a good chance that the aggregate trade deficit could grow.
A widening deficit increases pressure on South Africa’s current account, considered a good measure of a country’s trade in goods and services. The current account gap peaked at 6% of gross domestic product (GDP) during the third quarter of 2014. Subsequently, the rand had dropped more than 9% against the dollar since the beginning of the same year.
Current Economic Condition
Imports dropped by nearly 9.9% to 80 billion rand in December as the purchase of capital-intensive products like machinery and electronics dipped by 13%. Also in December, crude oil purchases declined by 7.5%. Meanwhile, exports increased by 3.8%, led by mineral-based products including coal and iron ore, which were up 25%.
Excluding trade with neighboring countries, South Africa posted a 0.7 billion rand deficit in December. This brought the overall trade gap of 2014 to nearly 200 billion rand. Experts commented that monthly trade figures are usually volatile and reflect upon the timing of exports of high-value commodities like oil and diamonds.
