Money world

South Africa’s trade account may have been balanced last month as companies increased imports to replenish stocks, adding to signs that the economy is recovering from its first recession in 17 years.

Exports equaled imports in August, according to the median estimate of nine economists surveyed by Bloomberg. The country had a 400 million rand ($54.1 million) trade surplus in July, as three consecutive quarters of economic contraction caused manufacturers and retailers to curb orders from abroad.

“We see the economy coming out of recession in the third quarter thanks to the start of a strong inventory build-up,” said Peter Attard Montalto, an emerging markets economist at Nomura International Plc in London. “The drawdown in inventories over the cycle so far has been very violent and as manufacturers start to look forward and see a rosier global picture” they will import more.

South African Reserve Bank Governor Tito Mboweni left the bank’s benchmark interest rate unchanged at 7 percent on Sept. 22, after cutting it six times since December, saying he expected “growth to rebound in coming quarters.”

The economy contracted 3 percent in the second quarter, after tumbling 6.4 percent in the first, while non-farm job losses slowed to 67,000 from 179,000 over the same period, government data show. Manufacturing contracted an annual 13.7 percent in July, its slowest pace in four months, another indication that the recession may have bottomed out.

The South African Revenue Services will report the trade data at 2 p.m. on Sept. 30. Trade figures are often volatile, reflecting the timing of shipments of oil, diamonds and other commodities.

Import Collapse

South Africa posted three consecutive trade surpluses through July as domestic demand collapsed. Imports fell to a low of 39.4 billion rand in May from a record 74.4 billion rand in July, 2008. They picked up to 39.8 billion rand in June and 44 billion rand in July.

The drop back into a trade deficit may be accelerated by this year’s 28 percent rally in the rand against the dollar, which has undermined exports.

The “sustained rand strength mutes much of the benefits of improved global demand,” Gina Schoeman, an economist at Macquarie First South Securities in Johannesburg, said in a note to clients.

Over the past five years, the ratio of exports to GDP rose to 35.4 percent from 26.7 percent, while the ratio of imports rose to 38.5 percent from 27.1 percent.

“There is increased demand from Asia in particular, as they rebound rapidly from this crisis,” said Attard Montalto, who forecast a trade gap of 2 billion rand. “I think we shall see a pretty strong export number combined with an even higher import number” in August.

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