South Africa’s trade surplus decreased from 1.45 billion U.S. dollars in July 2022 to 424 million dollars in August 2022 due to load shedding and other constraining issues, said the First National Bank (FNB) on Tuesday.
The FNB, one of South Africa’s “big four” banks, said the trade surplus in August 2022 is the second lowest surplus since May 2020. The FNB head of trade – structured trade and commodity finance, Bobby Madhav said the trade surplus was lower than the expected 1.4 billion dollars.
“The smaller surplus was the result of a decrease in exports of one percent month on month and a sizable increase of 10.4 percent in imports compared to the previous month. The decline in exports came mainly on the back of substantial lower exports of precious metals and stones of (-15 percent); base metals of (-11 percent) and chemical products of (-13 percent),” said Madhav.
He said that the country has failed to mine and ship products to export markets during a time of high (although somewhat softer) global commodity prices. Madhav explained that imports of mineral products increased by 14 percent, machinery and electronics by 16 percent and original equipment components by 13 percent.
He said “Asia was once again the only region that South Africa recorded a marked deficit with 2.12 billion U.S. dollars. The deficit with this region has been ever-increasing recently, with imports from China rising considerably and exports to that country moderating.”
Madhav said China was still the top import and export partner of South Africa, accounting for 21.6 percent of total South African imports. The U.S. was South Africa’s second largest import partner (7.2 percent of the share) and followed by Germany (6.9 percent share).
Madhave pointed out that business confidence continues to decline after inflationary pressures forced the South African Reserve Bank to increase repo rate by 75 basis points. He said employment data shows that formal employment declined.
Madhav said the current load shedding that affects manufacturers and miners to maintain their production targets would negatively affect trade prospects in the next coming months.