In April 2010, South Africa’s trade balance moved back into deficit at -R1.9bn. This was in-line with market expectations, and compares with a trade surplus of R0.5bn in March 2010.
During April 2010, imports fell by a substantial 9.8%m/m, but exports declined by a very disappointing 14.3%m/m. The decrease in imports, which amounted to R5.0bn during the month, was largely due to a R1.6bn decline in oil imports as well as a R0.78bn drop in vehicle imports. On the export side (which decreased by a substantial R7.4bn in April) precious metals declined by a dramatic R2.5bn, coal exports fell R1.4bn, vehicle exports decreased by R1.2bn and exports of metal products dropped R0.75bn.
In the first four months of 2010, SA imports were down 5.0%y/y or R9.6bn, while exports were up 0.7% or R1.2bn. The combination resulted in South Africa recording a trade deficit of only R10.9bn during the period January 2010 to April 2010. This compares with a deficit of R21.7bn during the corresponding period in 2009. (see chart attached).
Looking forward (next few quarters), although SA exports improved towards the end of 2009, helped by higher commodity prices, they are likely to struggle to accelerate significantly given the still strong Rand and fairly modest world economic recovery. Fortunately, from a balance of payments perspective, import demand is expected to also remain fairly modest given the still weak domestic economy. This implies that although the trade balance is likely to weaken during 2010, with SA running a more persistent trade deficit, this deterioration should be fairly modest.
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