Metals prices help narrow trade gap
May 5, 2008
Johannesburg - South Africa's trade deficit narrowed to R5 billion in March as a weaker rand and high gold and platinum prices boosted exports.
The deficit shrank from R5.8 billion in February, the SA Revenue Service (Sars) said last week. The shortfall was in line with the median estimate of 11 economists polled by Bloomberg.
Rising exports may help to narrow the current account gap, the broadest measure of trade in goods and services, which hit a 36-year high of 7.3 percent of gross domestic product last year.
"The commodity price boom and the weaker rand are supportive of the trade balance," said Doret Els, an economist at Efficient Group.
"It will relieve some pressure on the current account gap.''
South Africa relies on foreign investment in stocks and bonds to fund the shortfall - inflows that began to dry up in the fourth quarter as investors sold riskier, emerging market assets, thus undermining the rand.
The local currency has lost 9.8 percent against the dollar this year. It is the worst performer of 16 major currencies tracked by Bloomberg.
The rand increased to R7.5720 to the US dollar on Wednesday, from R7.606 before the trade deficit data was released.
Exports rose 9 percent to R51.2 billion in March from the previous month, mainly due to a 36 percent jump in shipments of precious and semiprecious stones and metals, said Sars.
Imports increased 6.5 percent to R56.2 billion in the month, boosted by a 29 percent gain in chemicals and a submarine purchase. Imports surged last year as the government increased spending on power plants, railways and stadiums, in preparation for the 2010 World Cup.
With planned infrastructure investment of R568 billion over the next three years, the government expects the current account gap to widen to 7.9 percent next year and 8 percent in 2010.
Trade figures are often volatile, reflecting the timing of shipments of oil, diamonds and other commodities. The figures released by Sars are unaudited and may differ substantially from later, revised numbers.
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