South Africa is becoming less reliant on the US and the troubled economies of Europe as markets for its exports, according to SA Revenue Service (Sars) data. A country breakdown of trade figures shows domestic exports to Asia have surged over the past five years, while those to many other regions have grown more slowly.
Exports to Europe have fallen from 34 percent of South Africa’s total, in the first half of 2006, to 27 percent in the first half of this year. Shipments to the US have fallen from 10.7 percent to 8.7 percent. In contrast, exports to Asia have risen from 26 percent to 35 percent of the total.
This shift in trading patterns will help South Africa absorb the impact of the US and euro zone debt problems, which simultaneously went critical this month.
In June, the International Monetary Fund (IMF) forecast growth of 2.2 percent this year for advanced economies and 6.6 percent for emerging and developing countries. Since then prospects for advanced economies have become even grimmer and the potential impact on the rest of the world is difficult to measure.
While the extent of the fallout is uncertain, South Africa will undoubtedly suffer collateral damage as the major economies slow, reducing the ability of their businesses and households to buy goods from abroad.
As early as April, the World Trade Organisation said trade growth would slow, after last year’s surge of 14.5 percent, to a more modest 6.5 percent. It said last year’s rise in volumes enabled the world to recover its pre-crisis level but not its long-term trend.
It cited a “greater degree of uncertainty” around forecasts. Since then uncertainty has increased significantly as the US and euro zone countries have demonstrated an inability to resolve their mounting debt problems.
The world economy will depend on emerging markets to drive growth, with China playing a starring role. China, which the IMF forecast would grow 9.6 percent this year, has been South Africa’s biggest customer since 2009, when it bought R47.7 billion worth of local exports, almost 36 percent more than in the previous year.
The second-biggest economy continues to top the list of export destinations, buying R39.4bn worth of goods in the first half of this year, compared with purchases worth R5.3bn in the first half of 2006.
The US, despite its slow recovery, was the second biggest customer, spending R28.4bn on local goods; followed by Japan (R27.1bn), Germany (R21.2bn), the UK (R13.3bn) and India (R11.1bn). The UK imported less in absolute terms than the R13.4bn in the first half of 2006.
South Africa’s exports to all regions are heavily skewed to natural resources, but more so in the case of Asia. Of total exports to Asia, 83 percent are in three categories: mineral products; precious metals and stones; and base metals. The same three categories represent 58 percent of exports to the US and 55 percent to Europe.
Taku Fundira, a researcher at the Trade Law Centre for Southern Africa, said diamonds and platinum made up most of the precious metals category; iron and steel and aluminium were the major base metals; and oil and coal were the main mineral products.