South Africa’s trade surplus drops to R7.2 billion

The South African Revenue Service’s (SARS) trade statistics for August 2022 recorded a preliminary trade balance surplus of R7.18 billion.

The surplus was lower than market expectations of R23.7 billion and the second lowest surplus since May 2020, said financial services group FNB.

The smaller surplus was the result of a decrease in exports of 1% month-on-month and a sizable increase of 10.4% in imports compared to the previous month, it said., noting that the decline in exports came mainly on the back of substantial lower exports of precious metals and stones of R5.4 billion (-15%); base metals of R2.0 billion (-11%) and chemical products of R1.5 billion (-13%).

“The export values of South Africa’s mining products continue to be impacted by the country’s inability to mine and ship these products to export markets during a time of high – although somewhat softer – global commodity prices,” FNB said.

SARS said that the year-to-date (1 January to 31 August 2022) preliminary trade balance surplus of R163.36 billion is a deterioration from the R325.06 billion trade balance surplus for the comparable period in 2021. Exports increased by 11.9% year-on-year whilst imports increased by 44.9% over the same period, it said.

The R7.18 billion preliminary trade balance surplus was attributable to exports of R175.37 billion and imports of R168.19 billion.

During this period, SARS said exports decreased by R1.83 billion (1.0%), while imports increased by R15.80 billion (10.4%) over the same period.

“Exports for the year-to-date increased by 11.8% to R1 330.18 billion from R1 189.46 billion over the same period during 2021. Imports for the year-to-date of R1 166.82 billion were 35.0% more than the R864.40 billion imports recorded during the same period in 2021.

“The cumulative trade balance surplus for 2022 is R163.36 billion. On a year-on-year basis, the R7.18 billion preliminary trade balance surplus for August 2022 was a deterioration from the R40.61 billion trade balance surplus recorded in August 2021.

“Exports of R175.37 billion were 11.9% more than the R156.71 billion exports recorded in August 2021. Imports of R168.19 billion were 44.9% more than the R116.10 billion imports recorded in August 2021.”

The July 2022 preliminary trade balance surplus was revised upwards by R0.05 billion due to the ongoing Vouchers of Correction (VOC). The revision was from the preliminary trade balance surplus of R24.76 billion to the revised trade balance surplus of R24.81 billion.

FNB noted that while China remains the top import and export partner of South Africa, Chinese imports now make up 21.6% of total South African imports.

The US was the country’s second-largest import partner (7.2% of the share) and Germany the third (6.9% share).

“Half of South Africa’s imports now originate from a mere five import partners. The country’s export partner base is far more diversified, with the top five export partners contributing approximately 32% to total exports,” it said.

The outlook for trade is bearish, FNB said, noting that various local developments are weighing down South Africa’s prospects – but load shedding remains the biggest blight.

“Inflationary pressures led the Reserve Bank to increase its repo rate by 75 basis points, employment data indicated that formal employment declined, and business confidence remains under pressure. However, it is the record-breaking incidences of load-shedding experienced during September that will have the greatest impact on trade prospects for the coming months.”

Not only was the load-shedding continuous – and still in place – but it also happened at generally higher stages. Manufacturers and miners struggle to maintain production in these conditions, hurting not only these industries but the economy in general, FNB said.

Read: South Africa’s horror year of load shedding – here’s how it compares