SA's trade deficit R2.7 billion in March

South Africa recorded a trade deficit of R2.74 billion in March, virtually unchanged from the shortfall in February, the South African Revenue Service (SARS) said today.

The figure, below the R4.1 billion deficit forecast in a Reuter's poll of economists, confirms a trend of relatively small deficits in the wake of January's R11.7 billion shortfall and record deficits in the second half of 2006. SARS said exports rose by 13.59% month-on-month largely due to increases in exports of semi-precious and precious stones and metals.

Imports up
Imports were up 12.88% compared with the previous month on higher shipments of machinery, mechanical appliances and electrical equipments and mineral products, especially oil. Analysts said the data may ease some pressure on the central bank to raise interest rates at its next policy meeting in June, after inflation numbers last week pointed to growing price pressures.

"It's lower than market expectations. The lower trade deficit suggests the current account deficit may also have narrowed in the first quarter, and that should be comforting for the Monetary Policy Committee," Magan Mistry, a Nedbank economist, said.

Rand firms up
The rand firmed after the figure was released, gaining two cents against the dollar to 7.0550 at 1220 GMT. Large monthly trade deficits have weighed heavily on South Africa's current account, swelling its deficit to a near-three-decade record of 7.8% of gross domestic product in the fourth quarter of 2006. The sharp deterioration was blamed mostly on a jump in oil imports.

A massive government infrastructure spending programme has also led to increasing imports of machinery. SARS said the cumulative trade deficit for the first three months of the year was R15 billion compared with R14.7 billion during the same period last year. - Reuters