SA exports on an upward trajectory - will this be sustained in 2018?


South Africa’s trade data is showing exuberant growth.

December 2017 will undoubtedly be a month to remember insofar as our trade surplus figures are concerned - more specifically so in terms of the exponential growth of our exports and a widening trade surplus, recording a year and a half high of R 15 724 069 927 – or fifteen billion, seven hundred and twenty four million, sixty nine thousand, nine hundred and twenty seven rand.

This figure indicates record growth for our country and reaffirms our global export competitiveness. The months preceding December also saw a consistent narrowing of our trade deficit and an increase in surplus figures from September 2017 with growth figures averaging around R 4.5 billion.

The aforementioned facts and figures indicate that exports are on the up and imports are dwindling slightly, which is definitely a step in the right direction for our export growth. We need to examine the reasons behind the growth to see if this is just seasonal or whether this consistent growth can be sustained in 2018. 

Many foreign investors have prematurely written off South Africa’s global competitiveness, with comments made about our lack of sustainability and our lack of consistency. Well trade data revelations over the last three months would definitely have silenced critics, just as an audience in a cinema is silenced at the start of a blockbuster - and a blockbuster it has been with exports being the star performer.

The data below has been sourced from the Sars Trade Statistics webpage.

 DECEMBER 2017 OVERVIEW

EXPORTS

  

IMPORTS

  

R  104,320,264,316 

R  88,596,194,389 

Trade Surplus:

  R 15,724,069,927

Top 5 countries we exported to:

Top 5 countries we imported from:

1. 2. 3. 4.

5.

China (11.6%)

United States (7.1%)

Germany (6.0%)

India (5.4%)

United Kingdom (4.3%)

1. 2. 3. 4.

5.

China (18.9%)

Germany (7.9%)

United States (6.4%)

Oman (5.5%)

India (5.0%

       

South Africa’s export performance improved significantly in the first nine months of 2016.

Consequently, the deficit on the balance of trade narrowed to R10.5 billion, compared to R60.2 billion for the same period in 2015. Substantially higher mineral exports (mainly gold), along with increased exports of manufactured goods such as motor vehicles, parts and accessories, basic iron and steel, processed food, as well as paper and paper products, all contributed to this outcome. This growth continued in 2017 with trade deficits narrowing progressively in the first half of the year followed by steady and progressive growth in trade surpluses from the latter half of the year. 

After in-depth analysis of Sars Customs and Excise cumulative trade data and reading through many publications on South African exports during the 2017 calendar year, South Africa’s export growth is evident. The emergence of new small to medium sized exporters has also contributed positively to the increased growth so indeed it is not a seasonal phenomenon but rather the start of a new and steady trend.

Our bulk export volumes increased considerably by 30.7% year on year in October 2017 to a new record of 16.7 million tonnes, according to Transnet National Ports Authority. The previous record of 16.4 million tonnes was set in January 2015. 

This brought the increase for the first 10 months to 7.5%, possibly implying that the South African economy, in common with most of the world, is doing better than the consensus forecast, which has failed to recalibrate to the improving momentum of growth.

Bulk exports out of Saldanha grew by a substantial 64.3% in October 2017 to 6.6 million tonnes after two consecutive months when exports out of the port were less than 4 million tonnes. Bulk exports ex Richards Bay grew by a healthy 13.3% in October to 8.5 million tonnes after increasing by 36.3% in July to 8.4 million tonnes.

South Africa’s trade surplus increased to R4.56 billion in October of 2017 from an upwardly revised R4.48 billion surplus in September, and above market expectations deficit of R1.00 billion. Exports increased 2.2 percent and imports went up 2.3 percent. Considering the January to October period, exports increased 6.6 percent and imports decreased 0.2 percent, shifting the country's trade balance into a R51.62 billion surplus from a R9.9 billion gap in the same period of 2016.

One needs to look at the year-on-year data for a more accurate reflection, taking cognisance of the fact that the latter part of the year generally coincides with increased activity around the citrus export season and a general increase in export volumes. This was however not the case in 2016. Trade figures for December 2016 showed a vastly contrasting picture compared to trade figures in December 2017.

I do believe that we will have a successful 2018 insofar as consistent growth in our exports and marginal declines in our imports are concerned. Our exports have grown exponentially and are continuing to grow in a sustainable manner whilst our imports are periodically declining. We cannot obviously expect to have a good month every single month throughout the year - as much as we would want to – and if historic trade data is anything to by, it will definitely throw us a few months in 2018 with deficit figures. We can however maintain our optimism and appreciate the consistent narrowing deficit. We are around three weeks away from receiving the release of January 2018 trade statistics so it remains to be seen if we have indeed maintained growth for a fourth consecutive month; I reckon we may very well have. The sands through the hourglass will soon reveal the accuracy of my opinion. 

2018 is the Year of the Dog as per the Chinese Zodiac. I’m not big into predictions, so the statement that follows is purely speculative. Assuming we had an International Trade Zodiac, I would be confident enough to name 2018 as the year of the South African Exporter.  

Devlyn Naidoo is currently a facilitator and customs mentor at the SA Maritime School and Transport College (SAMS), a privately owned college that provides training and skills development in international trade, freight handling and customs compliance.


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