Infrastructure programme anchors import growth

Despite the weakness of the rand, South Africa’s imports have remained relatively stable thanks to government’s major infrastructure programme. According to Busisiwe Radebe, an economist with Nedbank, while imports have seen a decrease in recent months, the situation is not as bad as is currently being experienced with exports thanks to the spending on infrastructure. “It is probably the saving grace for our import sector as we will see our imports anchored by this programme, which has initially been costed at R3.2 trillion over 20 years,” she said. “It is definitely expected to stimulate the economy somewhat as government will have to import capital goods if they want to be successful. We are therefore predicting that over the short- and medium-term we will see an uptick in imports.” This is already evident in the latest reports released by the Industrial Development Corporation (IDC) that show a spike in capital goods being imported during 2012 while the import of consumer goods has declined. “This is very positive,” said Radebe. “We want to see less consumer goods being imported and more capital goods.” “The August to September change in imports of goods reflected decreases mainly in mineral products, machinery and electrical appliances, products of the chemical and allied industries as well as original equipment components,” said a Sars spokesman. According to Radebe, the decrease in imports is not as much of a concern as the continued contraction of exports. Export volumes contracted at an annual rate of 6% in the second quarter of 2012 after falling by 1.5% in the first quarter. While import volumes are now almost 4% above pre-crisis highs, exports are still well below their peak. What made the situation more worrying, said Radebe, was that the relative weakness of the rand was not resulting in an increase in exports. This was a concern also raised by Finance Minister Pravin Gordhan in his medium-term budget policy statement earlier this year. He said while in real terms the rand was 7% weaker in the first half of 2012 compared to the same period in 2011, it had so far provided little support for manufacturing export growth, which remained exceptionally weak in the present economic environment. CAPTION IDC reporting a spike in capital goods being imported during 2012.