SA's global trade slips

South Africa recorded a trade deficit of R1.889-billion with non-Southern African Customs Union partners in April, after a surprise R457.8-million surplus in March, figures from the SA Revenue Service showed yesterday.

This was not as bad as the

R2.3-billion deficit expected.

"These figures are better than market forecasts," said Freddie Mitchell, economist at Efficient Group. "But what is disconcerting is that both exports and imports decreased, with imports declining faster. We'll have to keep a keener eye on developments in the eurozone."

Although April's trade deficit is high, it is not the worst. A record R17.4-billion deficit was recorded in January last year.

Economists.co.za economist Mike Schussler said: "The number has come in close to where I expected. If one thinks South Africa has a strong currency and commodity prices are high - besides that we have a huge propensity to export - a small deficit can be expected every month. And I regard anything under R2-billion as small."

A surplus had not been expected in April owing to a mild deterioration in the terms of trade, with rand-oil price growth exceeding growth in platinum and gold prices. Other factors, including the recent volcanic ash cloud in Europe, are believed to have played a role in reversing the trade surplus.

But the trade figures will have little effect on markets, according to Isaac Matshego of Nedbank.

However, the figure was worrying, he said.

"This is a large deficit. What is worrying is the sharp fall in exports. The May figure could reveal the same due to the recent large strikes.

"We still expect the current account deficit to widen marginally in 2010 after narrowing significantly in 2009," said Matshego.

Customs and excise said exports of mineral products decreased by R1.443-billion while exports of precious and semi-precious stones and metals were down R2.5-billion.

Stanlib economist Kevin Lings agreed with other economists' forecasts of a further deterioration in the trade account.

"Although South African 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," he said.