SA trade deficit improves in February

South Africa recorded a trade surplus of R3.99bn in February, the SA Revenue Service announced on Friday.

This includes trade with Botswana, Eswatini, Lesotho and Namibia (BELN).

Excluding BELN trade, trade data for February 2019 recorded a trade deficit of R3.28bn.

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According to SARS, the year-to-date - January 1 to February 28, 2019 - cumulative trade data including BELN shows a deficit of R9.08bn in February. This is an improvement on the deficit for the comparable period in 2018 of R27.97bn.

Exports for the year-to-date increased by 9.5% from R170.59bn in 2018 to R186.78bn in 2019. Imports for the year-to-date of R195.86bn are 1.4% less than the R198.56bn imports recorded in January to February 2018.

On a year-on-year (y/y) basis, the R3.99bn trade surplus for February 2019 is an improvement from the R0.85bn deficit recorded in February 2018.

Excluding BELN, the R3.28bn deficit for February 2019 is as a result of exports of R87.61bn and imports of R90.89bn.

Exports increased from January 2019 to February 2019 by R9.78bn (12.6%) and imports decreased from January 2019 to February 2019 by R7.36bn (7.5%).

The cumulative deficit for 2019 - excluding BELN - is R23.70bn, compared to a R41.16bn deficit in 2018.

Excluding BELN trade, the main month-on-month (m/m) export movements were in the category of vehicles and transport equipment (up 141%); machinery and electronics (up 19%) and base metals (up 11%).

SA had a trade deficit on a m/m basis with all major regions in the world, except with Africa.

The Nedbank Group Economic Unit commented that the outlook for exports has been hurt by renewed power disruptions, while protectionist measures and a deeper than initially projected slowdown in global growth also pose a threat. It foresees that import growth will be contained by still-weak domestic growth in early 2019.

"The trade balance should improve in 2019 while remaining volatile," said the unit.

Investec economist Lara Hodes said the trade balance moved back into positive territory in February, registering a surplus of R4.0bn, following its marked slide in January, to a deficit of R13.1bn.

She said exports typically lift in the month of February following the seasonal decline in January with the m/m surplus position underpinned by a 10.7% lift in exports, ahead of the 7.4% decline in the import category.

She commented that analysis of the underlying data reveals that growth in the export segment of the trade balance was largely driven by a lift in the vehicle and transport equipment category, which climbed by a notable 126% m/m to R8570m.

"The import component however, revealed broad based declines, led by the plastic and rubber category, which slid 22% m/m, with only imports of mineral products achieving any growth," she said.

She further pointed out that incoming economic data including survey evidence, from major economies such as the Eurozone, US and China are signaling a downswing in activity.

High policy uncertainty, ongoing trade tensions, and a further erosion of business and consumer confidence are all contributing to the slowdown, according to the OECD.

"As such, going forward, export growth could continue to decelerate, with Markit reporting a further contraction in new exports to 49.1 in February. This suggests a weakening in foreign demand for SA exports. Indeed, the Q1.19 manufacturing survey assessed 'a notable drop in export sales'," said Hodes.

"On the import side, growth is likely to be constrained by relatively low capital goods imports, linked to the weak rates of fixed investment in both the public and private sectors. Consumption goods imports could also register slower growth as consumers disposable incomes are affected by slower wage growth and higher administered price increases (petrol and electricity)."