South Africa Posts Third Straight Monthly Trade Surplus in April

JOHANNESBURG (Capital Markets in Africa) – South Africa recorded a surplus on its trade account for a third straight month in April as imports of equipment components decreased.

The 5.1 billion-rand ($388 million) surplus with March’s revised 11.3 billion-rand surplus, the Pretoria-based South African Revenue Service said in an emailed statement Wednesday. The median of four economist estimates compiled by Bloomberg was for a surplus of 7.4 billion rand.

A smaller trade gap eases pressure on the current account, the broadest measure of trade in goods and services, while also boosting the rand. The deficit on the current account was 1.7 percent of gross domestic product in the fourth quarter, the smallest since 2011. The central bank expects the shortfall to widen through 2019, it said on May 25.

For the year to date, the trade surplus was 9.89 billion rand compared with a 26.4 billion-rand deficit in the same period in 2016.

The rand has gained 4.7 percent to the dollar this year, despite losing as much as 11 percent against the dollar following President Jacob Zuma’s decision to recall Pravin Gordhan from meeting investors and subsequently dismissing him as finance minister. S&P Global Ratings and Fitch Ratings Ltd. subsequently downgraded the nation’s foreign-currency debt to junk.

This year, the rand has been the most volatile among major and emerging-market currencies tracked by Bloomberg. The central bank reduced its growth forecasts for Africa’s most-industrialized economy, with expansion expected at 1 percent this year from 1.2 percent, rising to 1.7 percent in 2018.

Imports declined 3.4 percent to 86.7 billion rand in April from a year earlier, while exports retreated 9.2 percent to 91.8 billion rand, the revenue service said. Shipments of machinery and electronics fell 18 percent, while imports of equipment components declined 17 percent.

The rand was little changed at 13.1308 per dollar by 2:11 p.m. in Johannesburg on Wednesday. The yield on rand-denominated government bonds due December 2026 fell 5 basis points to 8.56 percent.

The monthly trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.