Nedbank: Trade data

01 Feb.

Nedbank Economic Commentary: Trade data.

A large trade surplus was recorded in December following two months of large deficits.

• The trade account recorded a surplus of R4,7 billion in December following a R8 billion deficit in November.
• Imports fell sharply by 23,8% over the month, while exports were down by 8%.
• On a year on year basis, exports rose by 33,7% and imports by 16,8%.
• Almost all categories of imports contracted over the month, with the sharpest declines recorded in imports of mineral products (down by 23,5%), electrical equipment (down by 25,1%) as well as vehicles and equipment (down by 6,3%). Most categories of exports also declined in December, with mineral products, precious metals and stones as well as base metals recording sharpest drops.
• Over the quarter, the country recorded a deficit of R12,1 billion compared with a R15,5 billion deficit at the same period in 2010.
• The cumulative deficit for 2011 amounted to R15,1 billion compared with a R4,8 billion surplus in 2010.
• The trade outlook is uncertain, with export performance depending on global demand which is likely to be contained by the weakness in the Eurozone. Imports are likely to benefit from the gradual recovery in local fixed investment activity.
• The MPC’s focus will remain on the outlook for inflation and economic growth. Inflation will remain elevated, while economic activity will be subdued. As a result, we expect the SARB’s MPC to leave interest rates unchanged at current levels until around November.

Comment

The large trade surplus in December was a result of a sharp decline in imports relative to exports. The contraction in both exports and imports in December could be attributed to seasonal factors – as firms tend to stock up well in advance for the Christmas retail surge and there are fewer working days to process transactions.

Over the month, total imports fell by 23,8%, with all the major categories, except ‘the unclassified’ category recording contractions in December. The sharpest declines were recorded in the mineral products (down by 23,5% m-o-m and up 37% y-o-y), electrical equipment (down by 25,1% m-o-m and up 31,1% y-o-y) as well as vehicle and equipment (down by 6,3% m-o-m and up 39,3% y-o-y). …

See the full Commentary