Trade balance and rolling average
  • In contrast to market expectations of a trade deficit of R5.5bn in October, the trade balance remained in surplus at R4.6bn versus R4.5bn in September.
  • October typically records a deficit mainly on account of seasonal considerations relating to increased imports ahead of the festive season and year-end. However, actual import growth was lower than expected whilst exports continued to increase, yielding the trade surplus.
  • In particular, exports increased by 2.2% y/y to R104.5bn in October whilst imports rose by 2.3% y/y to R99.9bn.
  • In the year to date to October, the trade surplus totaled R51.6bn compared to a deficit if R9.9bn in the same period of 2016.
  • The trade surplus so far in 2017 reflects weak rates of domestic consumption and investment which have contributed to import compression. Specifically, import growth contracted by 0.2% in January – October.
  • Indeed, imports of consumption goods such as clothing have contracted by 5.2% y/y, whilst capital goods imports such as machinery and equipment fell by 6.7% y/y. Additionally, imports of agriculture products have contracted by 29.2% y/y with the recovery of domestic agriculture output post the drought.
  • The export performance has been comparatively stronger, with growth of 6.6% y/y in the January – October period. Export growth has been aided by a strengthening global economy and higher commodity prices (relative to early 2016 lows).
  • Commodities have accounted for the improved export performance so far this year. In the first ten months of the year, exports of mineral products, precious metals and base metals rose by 40.1% y/y, 6.3% y/y and 1.9% y/y respectively.
  • Advance indicators such as the global PMI continue to signal positive prospects for global trade in Q4.17 (see figure 2). Moreover, according the domestic BER Manufacturing survey, the export sales and order volume indicators were “robustly positive” during Q4.17 (see figure 3). The outlook for export growth over the next 12 months is also positive (see figure 4).
Figure 2: Global manufacturing PMI: new export orders
Figure 3: Manufacturing survey: export sales volumes
Figure 4: Manufacturing survey: expected volume of goods exported in 12 months