SA logged a trade surplus in August, a welcome movement in the context of upward-trending oil prices and domestic logistical constraints — but economists warn the surplus is expected to narrow as export potential remains constrained by a fragile global environment.
SA Revenue Service (Sars) data released on Friday shows the country posted a trade surplus of R13.3bn in August, smaller than July’s downwardly revised R15.4bn, surpassing market forecasts of R7bn.
Sars said August’s trade surplus was attributable to exports of R181.3bn, which rose 4.5% month on month, and imports, up 6.3% on a monthly basis to R168bn.
A country’s balance of trade is an important component of its balance of payments and a major indicator of the country’s trade. A weak trade balance could pressure the rand-dollar exchange rate in an environment where global financial conditions are aggressively tightening and demand for the safe haven dollar is rising.
A deficit is a signal that the domestic economy is likely to be more dependent on foreign funding at a time of heightened geopolitical uncertainty, which would further expose the country to exogenous shocks and financing risk.
Sars said the export growth was driven by citrus fruit, chromium products, iron ores, and coal, while imports were supported by substantial increases in fertilisers, original equipment components, and passenger vehicles.
Imports were driven by purchases of chemical products; original equipment components; wood, pulp and paper; as well as vehicles and transport equipment.
In terms of trade partners, SA recorded a R237bn merchandise trade surplus with the African continent from January to August.
SA recorded a R244bn deficit with Asia, and a R16bn merchandise trade deficit with Europe during the first eight months of the year.
Investec economist Lara Hodes said the numbers with Europe are reflective of the HCOB Flash Eurozone purchasing managers’ survey results that showed the private sector remained in contraction at the end of the third quarter of the year as waning demand led to a further decline in activity.
According to Oxford Economics global trade may decline by 1.5% in 2023. The negative developments in the Chinese economy have also created uncertainty.
North West University professor Raymond Parsons said commodity exporters are especially vulnerable to China’s slowdown. “The Chinese economy absorbs about a fifth of the world’s oil, half of its copper, nickel and zinc, and three-fifths of its iron ore. China’s setback comes at a time when most of the rest of the world, especially the US economy, remains on balance a positive ‘locomotive’ for the global economy,” Parsons said.
According to Sars, in the year-to-date (from January 1 to 31 August), SA recorded a trade balance surplus of R32bn.
Oxford Economics senior economist Jee-A van der Linde said while the R32bn trade surplus so far this year is much weaker than the R160.5bn surplus recorded during the corresponding period in 2022, the figures are welcome considering that unfavourable commodity price developments and domestic logistical and energy constraints weigh on export capacity.
“Another healthy surplus will be welcomed in the context of upward-trending oil prices and domestic logistical constraints,” Van der Linde said.
“We still expect the country to eke out a marginal merchandise trade surplus for 2023 as a whole.”
Hodes expected the surplus to narrow further as export potential remains constrained by a still fragile global environment and the myriad of domestic challenges faced, including load-shedding and logistical impediments. “Moreover, the value of imports will be impacted by the elevated oil price, which has climbed to over $96 a barrel.”
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