South Africa remains under economic pressure despite an increase in business confidence following the changing of the guard.
While Cyril Ramaphosa’s appointment as president resulted in a massive spike in consumer confidence it did not spill over to business confidence to the same degree. According to Nedbank senior economist Dennis Dykes, judging by the confidence figures, business remains fairly cautious.
Describing the current economic cycle as mild, Dykes said hopes were high for some movement in the economy later this year. The latest statistics did not however reflect any underlying improvement in the first quarter of this year, he said.
“Most of the growth was seen at the end of 2017 on the back of the momentous changes in the country. Also, the agricultural and mining sectors bounced back well,” he said. Speaking at the annual Road Freight Association (RFA) conference in the Western Cape recently, Dykes said the favourable global environment, reflected in buoyant global demand and higher commodity prices, would play a role in supporting exports during 2018.
A trade war between the US and China, however, remained a risk for exporters – along with policy uncertainty locally in key export sectors such as mining. This would continue to hamper recovery in the short term. Commenting on import growth, Dykes said this would be underpinned by the modest rebound in consumer spending. Overall, he said export values were down by 9.8% from a year ago, while imports had increased by 1.5%.
The key export categories continued to reflect mixed performances. According to Nedbank’s research, the lower value of mineral products suggested that coal exports continued to ease from the strong rise in 2017. Shipments through the Richards Bay Coal Terminal reached an historical high of 76.5 million tonnes in 2017, while coal prices have eased since last year. On the import side, the value of mineral products continued to be boosted by higher international oil prices and the weaker rand exchange rate.
Chemical products also rose further, while the value of electrical equipment as well as vehicles and equipment contracted further. The cumulative deficit for the first four months of the year narrowed to R17.65 billion, but compared unfavourably with the R8.52 billion surplus recorded over the same period in 2017. Dykes said growth of no more than 1.8% was being forecast for 2018.
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Overall export values were down by 9.8% from a year ago. – Dennis Dykes
