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Growing exports help widen trade surplus to R17.4bn
Growing exports help widen trade surplus to R17.4bn

Growing exports help widen trade surplus to R17.4bn

ECONOMIC NEWS - Sep 2nd 2016, 14:35

EXPORTS grew faster than imports in the first seven months of 2016, driven largely by a weak rand, leading to a R17.4bn surplus compared with a R24.7bn deficit over the same period last year. 

Data released by the South African Revenue Service (SARS) on Wednesday showed that for the year to date exports grew 10% to R652.1bn, while imports were 3% higher than the previous year at R634.7bn.

This partly reflects the effects of a weaker rand, which makes local goods and services cheaper and thus more attractive to global buyers but at the same time makes goods produced outside the country more expensive, causing a reduction in imports.

The cumulative data showing that exports were up 10% highlighted how external demand remained resilient, while outbound shipments were being supported by firmer rand-denominated commodity prices, ETM Analytics economist Manisha Morar said.

“Looking forward, we would expect the widening trend in the cumulative surplus to continue in the coming months,” she said.

The latest cumulative trade surplus also suggested that the trade balance would lend support to the current account, whose large deficit had contributed to rand weakness, economists said.

The current account deficit widened to 5% in the first quarter of 2016 from 4.6% in the previous quarter.

“If the trade balance continues to be in surplus, it should lead to a narrowing of the current account deficit and therefore support the rand,” said Tumisho Grater, economic strategist at Novare Actuaries and Consultants.

On a monthly basis, the trade surplus narrowed to R5.2bn in July from a revised R12.47bn (R12.53 previously) in June. Both imports and exports fell, although the decline in exports was greater.

Exports decreased from June to July by R9.4bn, or 9%. Imports decreased R2.2bn, or 2.4%.

Slower growth and weakening demand in SA’s main export markets contributed to the slump in the export numbers, Grater said.

Nedbank economist Johannes Khosa said that while agricultural imports were likely to remain strong due to the effects of the ongoing drought, other imports would grow modestly in line with slowing household and private sector demand.

Imports might continue to be subdued due to the weak local growth environment, Grater said.

SA’s exports have been struggling to pick up significant momentum as growth and demand in its main trade partners remains lacklustre.From DFM Publishers (Pty) Ltd 

Read more about: trade | import | export | economy |

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