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South Africa’s trade balance recorded a deficit for the first time in several months in May, largely due to a larger oil import bill as a result of the Middle East conflict.The country reported a preliminary trade deficit of R1.8bn in May as the rand value of imports amounted to R180.6bn versus exports of R178.8bn, the South African Revenue Service (Sars) said on Tuesday. That compares with a revised surplus of R14.4bn in April.On a month-on-month basis, exports decreased by 5.7% in May, driven by fewer shipments of gold, platinum group metals (PGMs) and passenger motor vehicles, while imports rose 3.1% on higher purchases of crude oil, original equipment components and motor vehicles.“As a net oil importer, South Africa is vulnerable to elevated oil prices, which increases the import bill and weighs on the trade balance. If oil prices continue to ease as Middle East tensions subside, we could see deficits proving to be temporary,” Standard Bank economist Shireen Darmalingam said.“The outlook for the trade account will depend on commodity export prices, global growth, and improvements in domestic logistics and port infrastructure,” Darmalingam added.“A sustained commodity price decline would weaken support for the rand and growth, while favourable terms of trade and ongoing reforms would help keep the trade sector as a source of economic resilience through the remainder of the year.”Investec economist Lara Hodes said gold and PGM prices have come under pressure partly on expectations of tighter US monetary policy as inflationary pressures have risen due to the war against Iran.The other category responsible for the decrease in export flows during the month was passenger motor vehicles; data from auto industry association Naamsa shows that vehicle export sales remained under pressure in May, falling by 4.8% year on year.Import flows increased thanks to the higher cost of crude oil, original equipment components and motor vehicles.“We expect the value of imports to decrease after the sharp reduction in global oil prices, with Brent crude currently trading below $75 a barrell,” Hodes said.“Progress in peace talks has seen supply disruption fears in the Middle East wane to an extent, with markets pricing in a more favourable global supply outlook. Accordingly, we expect the trade account to return to a surplus position. However, risks remain with the situation still fragile.”The Sars data shows that export flows for May were 2.7% higher than the same month in 2025, while imports climbed 17.3%.For the year to date, the trade balance remains R85.8bn in surplus, higher than the R60.1bn for the first five months of 2025.Excluding trade data with Botswana, Eswatini, Lesotho and Namibia, South Africa’s trade deficit was even wider at R11.9bn. Last month, African Continental Free Trade Area secretary-general Wamkele Mene said a more volatile global environment had strengthened the case for African economies to deepen regional trade links and reduce dependence on external demand.Mene said the global climate of rising protectionism, geopolitical fractures and erosion of the rules-based trading system made African economic integration more difficult but more essential. Earlier this month the local business community at a South Africa-Kenya business forum urged the leaders of both countries to eliminate red tape and tariffs that impede trade across the continent.
