Johannesburg - China’s economic slowdown, the slump in commodity prices, dwindling consumer spending power and the drought negatively affected South Africa’s container trade in the first quarter of this year, according to Matthew Conroy, the trade manager at Maersk Line Southern Africa.
Conroy said import and export markets had declined year on year by 8 percent and 12 percent, respectively.
He said the 2016 first quarter Maersk trade report showed economic restraints and less demand for South Africa’s commodities negatively affected trade levels.
The weakening import market was mainly due to a 13 percent decline in imports from Asia. “This trade lane represents about 45 percent of total imports into South Africa and is dominated by manufactured goods, which are on the decline due to lower consumer consumption in South Africa.
“Looking forward, we do not expect import trade to improve drastically very soon as there are no clear signs of an economic recovery, which is ultimately what is required to fuel incremental consumer spend,” Conroy said.
However, he said the smaller Middle East trade lane grew by 10 percent. “This is largely related to a local sourcing change, where more retail products are being sourced from the Middle East and less from Asia.”
The decline in exports was largely due to the drop in mining commodity demand and the drought.
Fruit exports
Maersk said earlier this year that the drought would lead to a dip in fruit exports from South Africa because of reduced production of citrus, apples and pears.
“Total dry exports have dropped by 14 percent over the last quarter, but within the larger Asia trade category, which is dominated by mining commodities, the market has dropped by 24 percent.
“Despite ongoing stimuli from the Chinese authorities, the Chinese economy is still struggling.
“The drought has also contributed to the overall decline in export trade as it has reduced the amount of animal feed and fruit exported,” Conroy said. He said export trade was, however, poised for “a minor provisional” improvement.
In the second quarter of this year, the mining sector had experienced a slight boost “and thus there should be an improvement on this quarter’s 14 percent drop in demand.
“However, this positive shift looks likely to be more of a restocking, as opposed to structural change in global demand, and thus will not continue for the full year. The biggest opportunity for the South African economy continues to be exporting more manufactured goods, which the weak rand enables,” he said.
Investec economist Kamilla Kaplan recently said an improved international trade performance was expected to contribute to the narrowing of South Africa’s current account deficit. “Based on the international trade data from (SA Revenue Service), in the first three months of the year, export growth outpaced import growth, resulting in a substantial compression of the trade deficit on a year on year basis.”
She said improvements in the trade balance position would have a positive impact on the current account.
BUSINESS REPORT