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South Africa trade deficit narrows as oil imports decline and gold, diamond exports surge

South Africa trade deficit narrows as oil imports decline and gold, diamond exports surge

SEOUL:  South Africa’s trade deficit narrowed as oil imports fell and gold and diamond exports increased. The trade gap shrank to 8.5 billion rand ($700 million) from a record 24.2 billion rand in January, the Pretoria-based Revenue Service said in an e-mailed statement on Tuesday. The median estimate of 17 economists surveyed by Bloomberg was for a shortfall of 5.7 billion rand. The deficit for the first two months of the year was 32.7 billion rand compared with 15.5 billion rand in 2014.

The volume of oil imports fell 22 percent in February as the price of Brent crude started to recover from an almost six-year low on Jan. 13. Importers such as Eskom Holdings SOC Ltd. used the record-low oil costs to step up their purchases. The utility, which generates about 95 percent of South Africa’s power, is burning more diesel as it struggles to meet demand.

“For the rest of 2015 we expect exports to recover and that should help us to record a lower trade deficit,” Isaac Matshego, an economist at Nedbank Group Ltd., said by phone from Johannesburg. “All of this depends on the avoidance of major production disruptions.”

The gap on the current account, the broadest measure of trade in goods and services, averaged 5.4 percent of gross domestic product in 2014 and will narrow to 4.5 percent this year, according to the National Treasury. A current-account deficit of close to 5 percent of GDP puts pressure on the rand, Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities in Johannesburg, said by phone.