Weaker rand offers some reprieve for trade deficit

THE STRING of trade deficits
is unlikely to abate in the near
future, although some reprieve
is on offer from the relatively
weaker rand, according to the
latest trade summary prepared
by Standard Bank economics
researchers, Danelee van Dyk
and Shireen Darmalingam.
“But for the better part
of last year,” the report
added, “imports still reigned
supreme.”
Along with the current
level of imports being only a
few billion rand away from
the highest recorded monthly
imports, December’s imports
contributed to a recordbreaking
R561.24-billion worth
of goods imported in 2007.
This compared with
R462.63-bn in 2006 and
translates into an annual
increase of 21.3%.
Among the import categories that contributed
to this record feat, said the
Standard team, were mineral
products, machinery and
mechanical equipment, and
chemical products – all of
which also reached new highs.
Imports of mineral products in 2007, in particular, surpassed 2006’s level by the
start of the third quarter of
the year – and there was a
23.6% increase in imports
of mineral products in 2007
compared to 2006.
“A similar trend for imports
is envisioned for 2008,” said
Van Dyk and Darmalingam.
January 2008 presented
similar diagnostics to those
in 2007. Mineral products continued increasing and came under renewed pressure
in February as international
oil quotes continued to test
new highs and presented a
greater need for fuel-powered
generators.
“Oil prices remain horrendously high and, if
sustained, could result in a
high oil import bill in 2008,”
said the team. “And then there
are imports of machinery
and mechanical appliances,
which increased by an annual
8.2% and by 7.2% monthon-
month (m/m) in January.
This category, together
with mineral products, is
the main driver of imports
and is expected to continue
supporting total imports in
February.”
While they expect the
weakness in the currency to
have supported the export
position in February – the
team’s data suggested that
it would not be sufficient to
carry the trade account out of
deficit territory.