South Africa’s trade surplus increased to R19.7 billion in September 2022 compared to the surplus of R6.2 billion recorded in August 2022. It was well above the R6.2 billion 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 (+R5.7 billion) and mineral products (+R2.4 billion).
The higher primary product exports continue to be supported by elevated commodity prices.
The exports of wood pulp and paper increased by 62% month-on-month to reach R6.1 billion 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.
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 R3.6 billion month-on-month in the imports of mineral products which consist mainly of oil.
The imports of vehicles and transport equipment increased by R3.2 billion and chemical products by R1.1 billion.
Tough local economic conditions are demonstrated in the decrease in machinery and electronics imports of R1.7 billion.
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 the only region in South Africa that recorded a marked deficit of R37 billion.
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, it will not last.
Government and industry must continue working together to improve global competitiveness and 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 even faster.
Consequently, South Africa’s market share in satisfying 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 load-shedding experienced in the country, the impact on trade will be felt in the coming months.