South Africa posts record trade surplus after exports of precious metals and stones sky-rockets
South Africa reported a whopping R18.7bn (£928m) trade surplus today, outdoing expectations.
Exports rose 14 per cent to R104.7bn on a month-on-month basis, driven by a 49.1 per cent increase in precious metals and stones and a 10.4 per cent increase in mineral products exports.
Imports were down 6.6 per cent to R86bn, the South African Revenue Service said. However, imports for the year-to-date, at R452.3bn, are 3.4 per cent more than the imports recorded in January to May 2015.
It is the highest recorded trade surplus in 19 years and has ballooned from April's revised deficit of £130m. The trade surplus in May 2015 was around four times smaller, at R4.4bn.
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Analysts polled by Reuters had expected a trade surplus of R3.1bn, while a median of 10 economist estimates compiled by Bloomberg forecast a R4.1bn surplus.
"I wouldn't draw too much of a conclusion from one month," Julie Beckenstein, head of Africa country risk at BMI Research told City PM
"Rand weakness will offer some tailwinds to South Africa export growth and allow trade dynamics to begin to rebalance. That said, there are still structural weaknesses, both in its mining sector and elsewhere that will act as a persistent drag on economic growth.
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"Low commodity prices, high production costs, the continued risk of strike action and the current high level of policy uncertainty all act as significant headwinds to investment into the mining sector and underpin our view that, while South Africa will remain the predominant mining sector in terms of overall size, growth will be subdued over a multiyear time horizon."
Since 2014, South Africa has been the second largest economy in Sub-Saharan Africa, when it was overtaken by West African powerhouse Nigeria.
In April, the International Monetary Fund (IMF) forecast the South African economy will grow by 0.6 per cent this year, although this will double to 1.2 per cent in 2017.