28 Mar 2018

Trade update: Trade rises to 0.4bn in February 2018 from a large deficit of R27.1bn January, on the back of a climb in exports

Annabel Bishop

Chief Economist

Figure 1: Trade balance and rolling average
  • Following a larger than expected trade deficit in January, the trade account registered a small surplus in February of R0.4bn (see figure 1). This was primarily on the back of a rise in exports of 3.8% y/y whilst imports moderated to 9.3% y/y from 18.1% y/y in January.
  • In month to month terms, imports fell 16.5% m/m in February 2018 to R90.2bn with machinery and electronics and base metals falling by 25% m/m and 24% m/m respectively.
  • Exports lifted by 12.0% m/m to R90.6bn, primarily on the back of strong growth in the vehicles and transport equipment category, which rose by 117% m/m. Favourable growth was also achieved by machinery and electronics exports and the prepared foods category which increased by 25% m/m and 18 m/m respectively.
  • The size of the trade account should remain muted this year as domestic economic activity recovers, albeit at a moderate pace, following recent positive events, including the avoidance of a sovereign credit downgrade by Moody’s, a fiscal friendly budget and more perceived policy and political certainty. This should support further strengthening of business and consumer confidence and should therefore translate into increased imports of consumption and investment goods.
  • We should continue to see favourable export growth in 2018, supported by robust, synchronized global growth prospects. Particularly, indicators such the new export orders component of the global manufacturing PMI, which indicates a sustained global expansion in economic activity in the months ahead (see figure 2).
Figure 2: Global manufacturing PMI: new export orders