SA’s January trade deficit is the smallest since 2012 and economists expect modest economic activity to keep the deficit well contained for the rest of 2017.
January’s R10.81bn trade balance deficit is an improvement on the deficit of R19.55bn recorded in January 2016.
Investec economist Kamilla Kaplan said: "Domestic economic activity is expected to recover only modestly this year, while there is scope for export growth to strengthen further, in line with the expected lift in global trade momentum."
She added: "A narrower trade deficit would contribute to keeping the current account deficit contained. This, coupled with the ongoing commitment to fiscal consolidation, should alleviate concerns regarding the ability to sustain and manage the twin deficits."
In December 2016, the economy posted a trade surplus of R12.4bn, but SA typically incurs a seasonal trade deficit in January as imports increase and exports drop off.
January’s trade balance deficit was attributable to exports of R80.59bn and imports of R91.40bn, according to figures released by Statistics SA on Monday.
Between December 2016 and January 2017 exports fell R13.09bn while imports rose R10.13bn.
BNP Paribas Securities Economist Jeffrey Schultz said: "It should be noted that the January 2017 trade deficit is actually the smallest shortfall since 2012 and highlights meaningful terms of trade gains, particularly in industrial metals, as well as persistently weak domestic demand conditions, which continues to keep a firm lid on import growth."
This trend was expected to continue for at least the first half of 2017.
"We remain of the view that SA’s current account deficit looks poised to narrow to between 3.5%-3.8% of GDP in 2017. This should at least help provide some support to the currency, which remains vulnerable to US Federal Reserve rate hikes and a less accommodative global funding environment," said Schultz.
The Treasury is forecasting GDP to rise to 1.3% in 2017 from 0.5%, while the World Bank expects the regional sub-Saharan economic growth rate to drop 0.5% to 2.5% due to low commodity prices, high food prices and weakening currencies.
The head of Standard Bank’s commercial banking division, Karl Gotte, warned: "Businesses will need to be more innovative to ensure sustainability in response to these anticipated economic challenges."
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