SA starts 2024 with a trade deficit

SA posted a trade deficit worse than the market expected in January, a further sign that favourable trade dynamics experienced since mid-2020 due primarily to commodity price tailwinds have died down.

This is another setback for the economy and the logistics industry as the government and businesses scramble to arrest Transnet’s decline.

SA Revenue Service (Sars) data released on Thursday shows the impact of logistical challenges on the trade deficit. There was a shortfall of R9.4bn in January, compared with an upwardly revised surplus of R15.6bn a month before.

The trade statistics show January’s goods imports rose 2.5% month on month to reach R153.7bn. Exports slumped 12.8% month on month.

The outcome was worse than market forecasts of a R5.2bn shortfall, pointing to the major headache congested ports are creating for businesses.

Sars data shows that in 2023, SA had a full-year total trade surplus of R62.2bn, exports of R2.04-trillion and imports of R1.98-trillion, constituting total trade of R4.02-trillion.

Sars attributed the January preliminary trade deficit of R9.4bn to exports of R144.3bn and imports of R153.7bn, inclusive of trade with Botswana, Eswatini, Lesotho and Namibia. Trade with African countries logged a R27.2bn merchandise surplus. There was a R12.3bn deficit with Europe. Trade with Asia had a shortfall of R32.5bn.

Investec economist Lara Hodes said the fall in export flows was driven largely by passenger and goods vehicles and coal, according to Sars. “This is supported by the latest vehicle

WE ESTIMATE THE ECONOMY EXPANDED BY A MEAGRE 0.5% IN 2023 AND THAT GROWTH WILL PICK UP ONLY SLIGHTLY TO 0.7% THIS YEAR

sales figures released by Naamsa. Export sales dropped by 442 units, or 2.1%, to 20,242 units in January 2024, compared with the 20,684 vehicles exported in January 2023,” said Hodes.

SA’s export potential continued to be impeded by a still muted global environment as well as the country’s myriad domestic challenges, including the logistical constraints, said Hodes.

Senior economist at Oxford Economics Jee-A van der Linde said port congestion and loadshedding had worsened considerably in recent months, with a key coal export line to Richards Bay shut and export activity mostly suspended after two coal freight trains collided in midJanuary.

“This was another setback for the economy in general and industry in particular as government and businesses scrambled to arrest Transnet’s decline,” said Van der Linde.

Oxford Economics’ base case remained for the SA economy to avoid a recession in the fourth quarter, but growth would stay weak. “We estimate that the economy expanded by a meagre 0.5% in 2023 and that growth will pick up only slightly to 0.7% this year,” he said.

More positively, and as highlighted in the budget, Transnet is expected to finalise its partnership with a private company by April to upgrade Pier 2 of the Durban Container Terminal.

Hodes said: “Durban’s port handles 46% of SA’s port traffic, and this joint venture will increase private investment for equipment, technological capability and higher operational efficiency.”

She said that January’s trade balance deficit of R9.4bn was still an improvement on the R24.4bn deficit for the matching period in 2023.