South Africa August Trade Gap Widens to Biggest in 7 Months

South Africa’s trade deficit

South Africa’s trade deficit widened to the biggest in seven months in August as oil imports increased and iron-ore exports fell because of maintenance work on a rail line.

The trade gap swelled to 16.3 billion rand ($1.4 billion) from a revised 6.8 billion rand in July, the Pretoria-based South African Revenue Service said in an e-mailed statement today. The medianestimate of 14 economists surveyed by Bloomberg was for a shortfall of 8.7 billion rand.

Transnet Holdings SOC Ltd.’s freight-rail unit shut its export iron-ore line from Sishen in the Northern Cape province to the Saldanha port for 10 days for annual maintenance last month, leading to a drop in shipments of the metal. Exports of vehicles and transport equipment rebounded after a strike in the metals and engineering industry in July forced carmakers such as General Motors Co. (GE) and Ford Motor Co. to shut their plants.

The large trade gap is “indicative of the very slow improvements of the productive sectors of the economy,” Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities in Johannesburg, said by phone. “South Africa’s trade deficit is likely to remain structurally high over the medium term and it suggests that the turnaround in the currency’s fortunes seem unlikely any time soon.”

Worst Performer

The rand reversed gains after the release of the trade figures, falling to the weakest level since January. It traded 0.4 percent lower at 11.3268 per dollar as of 2:36 p.m. in Johannesburg, extending its loss since the start of last year to 25 percent. That’s the worst performance of 16 major currencies tracked by Bloomberg.

The trade shortfall so far this year widened to 70.7 billion rand compared with 51.9 billion rand for the same period in 2013, the revenue service said.

Exports dropped by 9.6 percent to 77.2 billion rand in August as shipments of mineral products, which include coal and iron ore, fell by 5.1 billion rand, or 24 percent, and precious metals and stones decreased by 15 percent. Shipments of vehicles and transport components increased by 13 percent.

Imports rose by 1.4 percent to 93.5 billion rand as purchases of mineral products climbed 11 percent. Machinery and electronics purchases advanced 4.9 percent.

The monthly trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.