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January trade deficit at record high

Imports soared as exports dropped by 10.9%.

Johannesburg. – South Africa’s trade deficit widened to a record in January as imports of machinery, electrical appliances and mineral products soared, the South African Revenue Service said on Thursday.

The trade gap expanded to 24.53 billion rand ($3 billion) in January, from 2.7 billion rand in December, more than double analysts’ forecasts.

Exports fell by 10.9 percent over the previous month while imports increased by 24.5 percent, SARS said.

Economists surveyed by Reuters last week expected a trade gap of 11.75 billion rand. The data is volatile and often difficult to predict.

“The increased trade deficit…was due to increased imports of machinery and electrical appliances, mineral products, base metals, chemical products, plastics and rubber, textile and textile articles, and original equipment components,” SARS said.

“Exports decreased in precious and semi-precious metals, machinery and electronics, vehicles, vessels and aircraft.”

The weak trade data increases the pressure on the government, which is grappling with a widening current account and fiscal deficits and sluggish growth.

Finance Minister Pravin Gordhan said in his three-year budget on Wednesday that the current account deficit would average 6.2 percent over the next three years.

The budget gap for the financial year beginning in April is expected to widen slightly to 4.6 percent from the 4.5 percent previously forecast.

A larger current account deficit will be negative for the rand, which weakened against the dollar after the trade data was released.

The rand was at 8.9499 to the dollar at 1231 GMT, from 8.85 before the data was released at 1200 GMT. (Reporting by Tosin Sulaiman; Editing by Stella Mapenzauswa)

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