March trade deficit the same as February

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

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

The figure, below the R4,1billion deficit forecast in a Reuters poll of economists, confirms a trend of relatively small deficits in the wake of January's R11,7billion shortfall and record deficits in the second half of 2006.

SARS said that exports rose by 13,59percent month-on-month largely due to increases in exports of semi-precious and precious stones and metals.

Imports were up 12,88percent compared with the previous month on higher shipments of machinery, mechanical appliances, electrical equipment and mineral products, especially oil.

Analysts said that the data might ease some pressure on the Reserve Bank to raise interest rates at its next policy meeting in June, after inflation numbers last week pointed to growing price pressures.

"It is 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," Nedbank economist Magan Mistry said.

The rand firmed after the figure was released, gaining 2c against the dollar to 7,0550 at midday trading.

Large monthly trade deficits have weighed heavily on South Africa's current account, swelling its deficit to a near-three-decade record of 7,8percent 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. - Reuters

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