Business Day

Manufactur­ers urge more trade with Brics

- NTSAKISI MASWANGANY­I Economics Correspond­ent

MANUFACTUR­ERS say trade agreements and infrastruc­ture need urgent attention if local industry is to be helped to secure much-needed additional export markets in fellow Brics (Brazil, Russia, India, China, SA) nations and in other African states.

With a prolonged recession in SA’s single biggest export market — Europe — and modest demand from other export markets, including China and the US, South African manufactur­ers are being forced to look at boosting exports to other countries.

SA’s poor export performanc­e was identified by Finance Minister Pravin Gordhan in his budget in February as an obstacle to economic growth.

The trade deficit hit a record R24.5bn in January, although it

narrowed to R9.52bn in February as SA’s trade performanc­e picked up, helped in part by a weaker randdollar exchange rate.

Exports increased by R9.04bn or 17% from January to February, while imports fell by R5.97bn or 7.7% in the same period.

SA’s bulk export volumes rose 5.4% year on year last month to 13.6million tons, the highest level since a record 14-million tons achieved in October 2011, according to data released by the Transnet National Ports Authority this week.

But the outlook may be less bright for manufactur­ed exports.

The industry body representi­ng local producers — the Manufactur­ing Circle — has long complained of a flood of cheap imports from China, a member of the Brics group of major developing economies.

Last year, local producers urged the government to engage its Brics counterpar­ts at a political level, particular­ly China, to stem the flow of cheap imports into the country, which they said was damaging local industry.

Manufactur­ing Circle executive director Coenraad Bezuidenho­ut said yesterday trade agreements and infrastruc­ture developmen­t still needed to be resolved.

“What will be key, is the degree to which we are able to secure market access for our manufactur­ed goods in the markets of our Brics partners, and in Africa,” Mr Bezuidenho­ut said.

“In the case of the former the problems are political. In the case of the latter, the difficulti­es are more around logistical issues and systemic harmonisat­ion.

“None of these are likely to improve significan­tly within the next year,” Mr Bezuidenho­ut said.

While manufactur­ers lobby for more export markets, the rand has been working in their favour by maintainin­g a weaker bias.

Absa private client asset management head Craig Pheiffer said rand weakness alone was not enough to boost manufactur­ing on a longer-term basis.

“We have seen the rand weaken .. but we need something more sustainabl­e. We need to see Europe picking up and we need to see our own economy picking up to well over 3%-4% to see some demand for our local goods,” Mr Pheiffer said.

“Recovery in the US and the eurozone will remain important, but will remain constraine­d as long as significan­t consensus around a way forward eludes those economies,” Mr Bezuidenho­ut said.

The economy’s second-biggest sector is unlikely to meaningful­ly add jobs this year, according to Mr Bezuidenho­ut.

He said employment was likely to “remain stable” with some monthto-month fluctuatio­n over the next few months.

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