South Africa’s trade deficit balloons to R58 bln as imports increase 21% in first half of 2012

2013-01-15 00:00

SOUTH African imports rose to R399,9 billion for the first half of 2012, an increase of 21,2% compared the first six months of 2011.

This growth was influenced by a substantially higher price for imports of crude oil, refined petroleum products, motor vehicles, original motor vehicle components, as well as machinery for mining, quarrying and construction.

The leading imports in the first half of 2012 were crude oil, original motor vehicle components and equipment, motor vehicles, refined petroleum products, television and radio transmitters and line-telephony products.

South Africa’s imports were sourced mainly from Asia (mainly China, Japan, India, Thailand and South Korea), the European Union (mainly Germany, the Netherlands, Italy and the UK), Africa (Nigeria, Mozambique and Angola) and the Middle East (mainly Saudi Arabia, Qatar and Bahrain).

At the regional level, the highest rates of increase in import values over this period were for Africa, with 41,1% growth in South Africa’s imports from the rest of the continent, Asia (30%), the Middle East (25,7%) and Oceania (22,4%).

South African imports increased by R3,4 billion (4,9%) to R73,6 billion for August 2012.

The increase was partly due to the increase in the imports of mineral products and imported chemicals. Imports of machinery and electrical appliances, as well as vehicles, aircraft and vessels, decreased.

In an effort to mitigate the trade risk, entities trading abroad will need to consider hedging currencies because of the rand’s recent volatility.

Total exports from South Africa to the rest of the world amounted to R341,8 billion in the first half of 2012, representing a 6,5% increase relative to the first half of 2011. The expansion was mainly due to increased export values of coal, gold and iron ores.

The top export product categories were gold, iron ore, coal and precious group metals, followed by basic iron and steel. The leading regional export destinations for the first half 2012 were Asia, the EU and Africa, with China, the U.S. and Japan being the top three export destinations at the individual country level.

There was significant growth in exports to the Middle East (25,4% growth), Africa (20,3%) and the Americas (18,1%). The value of exports to the EU declined by 2,6% year on year to about R73,6 billion.

As for the euro zone, the combined merchandise exports to its 17 member countries fell by 3,9% to R55,5 billion for the first half of 2012, with the largest contraction in value terms recorded for Germany, down R3,3 billion, or -15,1%, to R18,3 billion.

Exports destined for the recession-hit countries on the monetary union’s periphery also shrank, specifically Portugal (-27,7% to R308 million), Greece (-16,6% to R268 million), Spain (-5,3% to just under R4 billion) and Italy (-5,2% to R6,1 billion). Exports destined for European countries outside of the EU declined by almost 19%.

Exports decreased by R2,1 billion (-3,3%) to R61,4 billion for August 2012. The decrease was partly due to a fall in exports of minerals and chemicals.

However, exports of base metals increased by R819 million.

South Africa’s balance of trade recorded a substantially higher

cumulative deficit of R58,1 billion for the first half of 2012, from a R8,9 billion deficit in the first half of 2011.

Regionally, South Africa’s

R2 billion surplus with Asia in the first half of 2011 turned into a R22,1 billion deficit for the first half of 2012. Deficits were registered with the EU and the Middle East, while the surplus positions historically held with the rest of Africa and Europe (excluding the EU) were reduced by R1,5 billion and R400 million, respectively.

The trade deficit for August 2012 increased by R5,5 billion to R12,2 billion from a deficit of R6,7 billion in July 2012. The increased trade deficit of R12,2 billion in August 2012 was mainly due to a decline in exports of mineral and chemical products. The cumulative deficit for the year to date to October is R69,9 billion compared to R8,7 billion in 2011.

South Africa last saw an extended trade deficit in 2008 just prior to the economic crisis.

If we consider this, accompanied with other relevant information, it is evident that we are currently in a similar position.

Saijil Singh is the lead analyst at Coface South Africa, an international credit insurer.

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