Trade Deficit surprisingly lower than expected

South Africa’s trade deficit surprised in its narrowing in May, incurring a shortfall of ZAR 6.6bn opposed to ZAR 12.4bn in April 2014.

The unexpected outcome was owing to a sharp 5.9% (month-to-month) fall in imports, while exports rose marginally by 0.6% on the month. Pulling back the lens, however, shows that broader trade dynamics have continued to worsen in the first half of the financial year 2014/2015, with the year-to-date trade shortfall standing at ZAR 47.1bn in May up from R34.6bn in the corresponding 2013 period.

Exports have come under pressure as lacklustre external demand again featured, while structural impediments also impact negatively. On the import front, demand has similarly come under pressure, yet growth in imports nonetheless continue to outpace export growth to preserve the trend of a widening trade deficit.

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