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Bobby Madhav | SA exports increase 10% m/m, trade surplus of R19,7bn

Bobby Madhav | SA exports increase 10% m/m, trade surplus of R19,7bn
01-11-22 / Bobby Madhav

Bobby Madhav | SA exports increase 10% m/m, trade surplus of R19,7bn

South Africa's trade surplus increased to R19.7bn in September 2022 compared to the surplus of R6.2bn recorded in August 2022. The surplus was well above the R6.2bn surplus the market expected. The larger surplus was the result of a sizeable increase in exports of 10% month-on-month and a small increase of 2.3% in imports compared to the previous month.

The increase in exports came mainly on the back of higher primary product exports such as precious metals and stones (+R5.7bn) and mineral products (+R2.4bn) which continue to be supported by elevated commodity prices. The exports of wood pulp and paper increased by an astonishing 62% month-on-month to reach R6.1bn worth of exports in September.

As one of the top 15 global exporters of wood pulp globally, the increase in pulp prices to record highs benefited the country handsomely. The exports of vehicles and transport equipment increased by 17% to reach R18.6bn for the month.

On the import side, high international oil prices led to an increase of R3.6bn month-on-month in the imports of mineral products (consisting mainly of oil). The imports of vehicles and transport equipment increased by R3.2bn and chemical products by R1.1bn. Tough local economic conditions are demonstrated in the decrease of machinery and electronics imports of R1.7bn. Any decrease in intermediary or capital goods imports such as machinery is bad for South Africa because it potentially impacts the productive capacity of industries such as manufacturing.

Asia was once again the only region that South Africa recorded a marked deficit with R37bn. The continued COVID-19 lockdowns in certain parts of China and its general slowdown in economic growth will invariably lead to lower commodity exports to that region. At the same time, South Africa's imports of mainly value-added products from China, continue unabated.

Whilst South Africa is currently experiencing bonanzas such as high trade surpluses, burgeoning industries related to the minerals complex, and resultant increased tax revenue, this will not last forever. Government and industry need to continue working together to improve global competitiveness to ensure sustainable growth.

Recent analysis has shown that in many products where South Africa has attained high export growth rates over the last few years, the global demand for those products has grown at an even faster rate. Consequently, South Africa's market share in satisfying the international demand has declined. Prime examples include industries such as minerals, steel, and electrical machinery.

The Transnet strike which lasted 11 days in October, disrupted the functioning of ports and the rail network severely. Together with the ongoing loadshedding experienced in the country, the impact on trade will be felt in the coming months.

* Bobby Madhav is FNB Head of Trade & Structured Trade and Commodity Finance.

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