Trade surplus widens in March

South Africa’s trade surplus widened in March due to a surge in exports, while growth in private sector credit extension moderated on the back of weaker corporate credit demand.

The South African Reserve Bank (Sarb) reported on Friday that the merchandise trade balance recorded a surplus of R11.44 billion last month from a revised trade surplus of R4.79 billion.

Sarb said exports of mineral products, which include iron ore and coal, increased by R1.7 billion during the period. Shipments of precious metals and stones, which include gold and diamonds, increased by R4.2 billion. However imports of textiles decreased R640 million, while vehicles and transport equipment imports increased by R2.9 billion.

An economist at NKC African Economic, Gerrit van Rooyen, said while monthly trade statistics were notoriously volatile, early indications for this year were positive.

“Export growth is supported by a moderate recovery in South Africa’s major trading partners and higher commodity prices, whereas the sluggish economy is keeping a lid on import growth - both developments playing into an improved trade balance, which will also have a positive impact on the current account we forecast a current account deficit of 3.7 percent of gross domestic product (GDP) this year compared to a 3.3 percent of GDP deficit in 2016,” van Rooyen said.

South Africa posted a trade surplus of R 3.5 billion in March, compared to R1.6 billion in February. However, data from the central bank said private sector credit extension growth moderated to 4.95 percent year-on-year in March from 5.29 percent year on year in the previous month.

South African households increased their loans by R3.7 billion, compared to a monthly increase of R7.4 billion in February, while the corporate sector increased loans by R16 billion following a monthly increase of R27.5 billion in February.

Credit growth extended to the domestic private sector, reaching a peak of 10.2 percent year on year in December 2015, averaging 6.9 percent last year. However, it has been on a downward trend ever since.

Investec economist Kamilla Kaplan said the constrained credit growth in the private sector was due to poor business and consumer confidence.

“A credit fuelled recovery in economic growth is not expected for as long as business and consumer confidence levels remain depressed.

“As such, meaningful demand led inflationary pressures should remain absent. This combined with the dissipation of supply side inflationary pressures over the course of 2017 should see inflation return to the 3 to 6 percent target range,” Kaplan said.

The latest Financial Services Index for the first quarter of this year showed that retail banks adopted an easier stance with regard to credit standards applied to both households and corporates, with credit criteria for corporates remaining easier than for households.

The Africa economist at Capital Economics, John Ashbourne, said the available activity data suggested that the economy was in pretty weak shape in February, with mining, manufacturing, and retail sectors all having contracted but expected green shots to filter in.

“We expect price pressures will continue to ease and headline inflation to re-enter the Reserve Bank’s target range in April. The next interest rate move is more likely to be a cut than a hike,” Ashbourne said.

The South African Revenue Service (SARS) has released trade statistics for March 2017 recording a trade balance surplus of R11.44 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS). The year-to-date trade balance surplus (01 January to 31 March 2017) of R4.98 billion is an improvement on the deficit for the comparable period in 2016 of R24.27 billion.

Including trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)

The R11.44 billion trade balance surplus for March 2017 is attributable to exports of R101.23 billion and imports of R89.79 billion. Exports increased from February 2017 to March 2017 by R13.96 billion (16.0%) and imports increased from February 2017 to March 2017 by R7.32 billion (8.9%).

Exports for the year-to-date (01 January to 31 March 2017) grew by 8.0% from R248.72 billion in 2016 to R268.68 billion in 2017. Imports for the year-to-date of R263.71 billion are 3.4% less than the imports recorded in January to March 2016 of R273 billion.

On a year-on-year basis, the R11.44 billion trade balance surplus for March 2017 is an improvement from the deficit recorded in March 2016 of R0.66 billion. Exports of R101.23 billion are 10.4% more than the exports recorded in March 2016 of R91.73 billion. Imports of R89.79 billion are 2.8% less than the imports recorded in March 2016 of R92.39 billion.

February 2017’s trade balance surplus was revised downwards by R0.43 billion from the previous month’s preliminary surplus of R5.22 billion to a revised surplus of R4.79 billion as a result of ongoing Vouchers of Correction (VOC’s).

Trade highlights by category

Trade highlights by world zone

The world zone results from February 2017 (revised) to March 2017 are given below.

Africa:

Trade Balance surplus: R17 222 million – this is a 29.3% increase in comparison to the R13 315 million surplus recorded in February 2017.

America:

Trade Balance deficit: R2 703 million – this is a 30.5% increase in comparison to the R2 071 million deficit recorded in February 2017.

Asia:

Trade Balance deficit: R5 104 million – this is a 24.1% decrease in comparison to the R6 728 million deficit recorded in February 2017.

Europe:

Trade Balance deficit: R5 340 million – this is a 36.7% increase in comparison to the R3 906 million deficit recorded in February 2017.

Oceania:

Trade Balance surplus: R 156 million – this is an improvement in comparison to the R 682 million deficit recorded in February 2017.

Excluding trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)

The trade data excluding BLNS for March 2017 recorded a trade balance surplus of R3.47 billion. This was a result of exports of R90 billion and imports of R86.53 billion.

Exports increased from February 2017 to March 2017 by R12.03 billion (15.4%) and imports increased from February 2017 to March 2017 by R6.91 billion (8.7%).

The cumulative deficit for 2017 is R15.87 billion compared to R48.65 billion deficit in 2016.

Trade highlights by category

Trade highlights by world zone

The world zone results for Africa excluding BLNS from February 2017 (Revised) to March 2017 are given below.

Africa:

Trade Balance surplus: R9 260 million – this is a 34.6% increase in comparison to the R6 878 million surplus recorded in February 2017.

Botswana, Lesotho, Namibia and Swaziland (Only)

Trade statistics with the BLNS for March 2017 recorded a trade balance surplus of R7.96 billion. This was a result of exports of R11.23 billion and imports of R3.27 billion.

Exports increased from February 2017 to March 2017 by R1.94 billion (20.9%) and imports increased from February 2017 to March 2017 by R0.41 billion (14.5%).

The cumulative surplus for 2017 is R20.84 billion compared to R24.38 billion in 2016.

Trade Highlights by Category