In the main, commodities accounted for the declines in both exports and imports. Exports of precious metals and base metals decreased by 21% m/m and 12% m/m respectively. Imports of mineral products and base metals fell by 27% m/m and by 18% m/m respectively.

However, on a cumulative year to date basis, the lift in commodity demand and prices has translated to an increase in SA’s commodity export values. In the first seven months of the year exports of mineral products, precious metals and base metals have risen by 33.5% y/y, 2.6% y/y and 1.2% y/y respectively.

On the import side, imports of agriculture products has contracted by 32.1% y/y as domestic agriculture output has recovered post the drought. Imports of consumption goods such as clothing have contracted by 9.5% y/y, whilst capital goods imports such as machinery and equipment fell by 10.1% y/y. This reflects the effects of subdued domestic demand amid depressed business and consumer confidence.

In the January to July 2017 period, exports rose 4.4% y/y whilst imports contracted by 2.2% y/y yielding a trade surplus of R36.6bn compared to a deficit of R4.7bn in the first seven months of 2016.

The SA economy is forecast to continue underperforming this year, yielding growth in the vicinity of only 0.5% y/y versus 0.3% y/y in 2016. In contrast, externally, leading indicators continue to signal sustained growth momentum for global trade. In particular, industrial activity has remained buoyant across most regions which should be reflected in ongoing trade growth.
Moreover, the global PMI for new export orders increased in July for the 12th consecutive month and the World Trade Organisation’s World Trade Outlook Indicator suggests that global merchandise trade growth will continue to strengthen in Q3.17.

These considerations suggest that SA’s trade balance, and by extension the current account balance, should remain biased towards small surpluses or relatively contained deficits in the remaining months of the year.