South Africa's trade surplus widened slightly to R20.5bn in August from a downwardly revised R18bn in July. The latest data from the South African Revenue Service shows that exports decreased by 5.8% month-on-month to R181.8bn. Despite the decrease, exports still outstripped imports, whose value dropped by 7.8% to R161.3bn. The trade surplus for the year to date stands at R149.5bn.
The weaker exports were driven by lower sales of platinum group metals, gold and zinc ores and concentrates to the rest of the world. Besides mineral products and precious metals and stones, exports of vegetable products and machinery and electronics slid by 9% and 3% respectively between July and August. Import flows decreased on the back of lower importation of petroleum oils, original equipment components and automatic data processing machines.
Investec economist Lara Hodes noted that import values are expected to increase in the near term as higher energy prices feed through to the import bill. Brent crude oil averaged more than $100/bbl in September, reaching levels last recorded in May as tensions in the Middle East escalated. However, manufacturing conditions globally have remained largely resilient, supporting export activity.
The JP Morgan Global Manufacturing PMI Index remained above 50 in August, indicating an improvement in international trade flows. Survey results indicated an improvement in new export business, rising for the first time since April and at the quickest pace for six months. Export flows for August were up 6.4% compared with the same month last year.
However, imports were down 4.2% year on year, according to the South African Revenue Service. The trade surplus with the rest of Africa decreased to R28.8bn from R31.9bn in July. The balance with the Americas switched to a surplus of nearly R2.3bn after a shortfall of just more than R5bn the previous month.
Conversely, South Africa's trade balance with Europe turned to a deficit of just more than R2.78bn in August after a previous surplus of nearly R3.83bn. The shortfall with Asia eased to R25.35bn in August from R31.51bn the previous month. South Africa has been trying to explore new export markets, including fellow Brics member states such as China and India.
However, its exports to the bloc still comprise mainly minerals, commodities and other relatively low-value products. In contrast, its trading partners bring in electronics, machinery, vehicles, refined petroleum products and fertilisers, among other finished products, putting it at a disadvantage. Research earlier this year showed the trade deficit between South Africa and its Brics partners had grown by $9.6bn in the 14 years to 2024 since it became a member.
Key points
- South Africa's trade surplus widened to R20.5bn in August.
- Exports decreased by 5.8% month-on-month to R181.8bn.
- The trade surplus for the year to date stands at R149.5bn.
