South African trade deficit doubles: official data

30th September 2014, Comments 0 comments

South Africa's monthly trade deficit more than doubled to 16 billion rand ($1.5 billion, 1.1 billion euros) in August, pointing to serious problems for Africa's most developed economy.

The South African Revenue Service reported that exports fell almost ten percent from the month before, sending the rand plummeting against the dollar.

Economists had predicted a 8.7 billion rand shortfall of exports compared to imports in August, after a revised 6.8 billion deficit in July.

For months South Africa's trade balance had been hit by strikes in the platinum and manufacturing sectors, but many had predicted some respite now that unrest has ended.

"This is worrying data," said Razia Khan, an economist at Standard Chartered.

"In all, it suggests that even with an end to the worst of the industrial unrest, South Africa's problems are not over."

The country's large trade deficits have been described as "the Achilles' heel" of the rand, a highly traded currency.

The South African unit has been under pressure due to weak domestic growth and the prospect of tighter monetary policy in the richest economies, which could slow foreign capital flows.

For ordinary South Africans, a weaker rand spells higher prices for everything from food to televisions, as imports are made more expensive.


© 2014 AFP

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