South Africa’s trade surplus decreases in April due to weaker trading

South Africa’s trade surplus decreased to R15.5bn for April 2022 compared to the surplus of R47.2bn of the previous month. The decline in the surplus came on the back of a sizeable contraction of 19% in exports and a more moderate decline of 3% in imports, resulting in exports of R151.8bn and imports of R136.3bn respectively.

The decline in exports is mainly the result of huge rand-value decreases in mineral products (-R13.6bn); precious metals (-R8.3bn); base metals (-R5.2bn) and vehicle and transport equipment (-R2.2bn). Given strong commodity prices and a depreciating Rand (the Rand depreciated by almost 10% from mid-April to end-April), the decline of mining product exports of roughly R22bn is quite surprising. The only reasonable explanation could be that less quantities were exported.

The ‘Minerals Council of South Africa’ has recently released research indicating that ‘logistical bottlenecks (rail, ports and border posts), unsustainably high electricity tariff increases, as well as unreliable supply and pervasive criminal incidents’ all contributes to unfavourable production and export circumstances.

These challenges in a critical period of the country where GDP growth is urgently needed, should be addressed. The capacity constraints at ports, affecting both exports and imports, are especially problematic and needs urgent attention.

Currently South Africa has benefitted hugely from the mining industry windfall over the last two years (big trade surpluses, increased government taxes, etc.). This is demonstrated by the fact that if mining products are excluded from both imports and exports, the rest of the economy recorded a trade deficit of R113bn for the first four months of 2022, compared to the published trade surplus of 79bn for the same period. This bonanza should therefore not lull government into inaction to tackle the supply-side issues in the economy.

Import decreases were broad-based, with smaller imports of machinery and electrical equipment (-R1.7bn); wood pulp and paper (-R1.6bn) and base metals (-R1.3bn). The only sizeable increase in imports was recorded by chemical products (+R1.9bn).

In line with the lower export of mining products, China has been pushed into third position as one of the top three destinations for South African products. China was pipped by both Germany and the US with shares of 9.2% and 8.0% of total exports. However, on the import-side, China remains by far the most important country of origin for South African imports with an 18% share. Germany and India follow, with shares of 7.6% and 7.2% respectively.

The Ukraine-Russia conflict, logistical bottlenecks and continued COVID-19 lockdowns in some areas of China will continue to dominate the trade landscape for the immediate future.