Bloomberg News

South Africa Posts First Trade Gap in December Since 2008

January 31, 2013

South Africa posted its first trade gap for December since 2008 as factories cut back on imports and a weaker rand boosted costs, threatening to widen the current- account deficit and undermine the currency.

The shortfall narrowed to 2.7 billion rand ($300 million) from 7.9 billion rand in November, the Pretoria-based South African Revenue Service said today in an e-mailed statement. The median estimate of 12 economists in a Bloomberg survey was 2.4 billion rand.

South Africa’s deficit in 2012 was more than six-fold larger than a year before at 117.7 billion rand as slower global growth and mining strikes curbed exports in Africa’s largest economy. That put pressure on the current account, the broadest measure of trade in goods and services, contributing to the rand’s slump to a four-year low.

While imports usually decline in December as factories and mines shut down, exports also fell in the month, contributing to the shortfall. Exports dropped 9.8 percent to 59.8 billion rand, led by a 32 percent slump in prepared foodstuffs and beverages, while shipments of base metals fell 23 percent.

Imports decreased 16 percent to 62.5 billion rand, led by a 42 percent plunge in shipments of original equipment components. Textile imports slid 33 percent.

The Reserve Bank has kept borrowing costs at the lowest level in more than 30 years since July to stimulate the economy. The rand has weakened 5.7 percent against the dollar this year, the worst-performer of 16 major currencies tracked by Bloomberg.

The current-account gap reached 6.4 percent of gross domestic product in the third-quarter, close to a four-year high. South Africa relies mainly on foreign investment in stocks and bonds to finance the shortfall, inflows that have fluctuated as investors sold riskier, emerging-market assets.

To contact the reporter on this story: Andres R. Martinez in Johannesburg at

To contact the editor responsible for this story: Nasreen Seria at

The Good Business Issue
blog comments powered by Disqus