S Africa trade: did China come through?

In the run up to this month?s trade data from South Africa, there were a couple of different theories doing the rounds.

One was that the deficit would get a lot worse, based on a the timing of holidays and the recent industrial unrest (hurting exports); the other was that the trade account would get a lot better, based on the weakening rand and a pick up of exports to China. The Bloomberg analysts consensus was for a slight improvement at R8.5bn ($945m) deficit.

Which was right?

In the end, the trade deficit did fall, from R9.5bn in February to R7.8bn in March ? a bit better than the consensus. The improvement was based on an increase in exports of 2.9 per cent, while imports were relatively flat, decreasing by 0.3 per cent.

The South African Revenue Service didn?t give the country breakdown, but in the regional analysis, it noted that for Asia the deficit decreased from R12bn in February to R7bn in March. Within that, exports increased by R1.9bn to R22.6bn and imports decreased by R3.2bn to R29.6bn.

South Africa?s trade balance with the rest of Africa also improved, by another R1.4bn. For the other main regions ? the Americas, Oceania and Europe ? the trade deficit increased.

The increase in Asian exports may well be down to China ? and the overall 6 per cent increase in mineral products certainly suggests it might have had some part to play.

But given that South Africa is still looking at a cumulative trade deficit of R41.8bn in 2013 so far compared to R27.6bn last year, March?s improvement hardly represents a big swing in fortunes. The chart shows that the record January figure has set the tone for the quarter, if not the year.

Source: Bloomberg, SARS

And the idea that improving March trade numbers could provide the catalyst for a currency revival was initially a bit wide of the mark: the rand depreciated at the time, briefly going back over the 9-to-the-dollar mark in the afternoon, before recovering slightly to around 8.97 to the dollar.

Related reading:
S Africa: China might make all the (trade) difference, beyondbrics
S Africa: trade deficit at record high, bb

Source: http://blogs.ft.com/beyond-brics/2013/04/30/s-africa-trade-did-china-come-through/

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