South Africa Trade Deficit Narrows by Half

South Africa Trade Deficit Narrows by Half

South Africa’s trade deficit experienced a significant decline moving to 64.5 billion rand ($6.3 billion) from 126.4 billion rand ($12.4 billion) during a 2013 period spanning from January to September, Bloomberg reported.

After altering data from 2010, which originally excluded neighboring country customs union imports and exports, the South African Revenue Service (SARS) revealed the true trade deficit. According to the report, last year’s trade deficit also experienced a drop moving down to $3.4 billion from $11.5 billion.

The revisions were reported to be unexpected and suspicious as just a month ago the government budget deficit was also lowered, which decreased deficit GDP contribution by roughly one percent.

“The extent of the revision to the SARS data would at least be positive for the rand and therefore the local fixed-income market. It will not improve the current-account deficit enough to ensure that South Africa is not viewed as a twin deficit economy,” Rand Merchant Bank economist Carmen Nel told Bloomberg.

Also reported in the article was the supplementary measures South Africa has taken to make up for the trade deficit — which since the beginning of 2012 contributed at least five percent of the country’s GDP. Bonds and stocks for the most part, Bloomberg noted are used to stabilize trade gaps.

“We are very suspicious of the timing now, when the government is very annoyed at its inclusion as a stressed country,” Peter Attard Montalto, an economist at Nomura Plc, told Bloomberg via e-mail.

“It’s a particular surprise it’s happened without any consultation or working papers or even mention by policy makers that actually trade numbers were better than they look,” he said.

Come December 3, the National Treasury and Reserve Bank will release its quarterly bulletin, giving SARS additional data to measure trade deficit adjustments against. Bloomberg further reported that the adjusted trade deficit includes a $6.1 billion trade surplus. Countries including Botswana and Namibia contributed to the surplus boost.

In another recently published article, Bloomberg reported that the South African rand measured in at its weakest against the dollar plummeting 0.5 percent to 10.1873 per dollar. Also this year, the rand fell to 17 percent against the dollar, ultimately affecting trade deficit data.