Shippers urged to switch focus over fears of EU slowdown

While SA trade
with the
European Union
probably won’t
be immediately impacted by
Brexit, economists have raised
concern that if recession hits
the continent local exporters
could feel the pinch.
But opportunities to grow
global intra-Africa and South/
South trade was where traders
should be looking for future
growth apart from the EU, one
of the country’s most important
trading partners, a global
financial expert has advised.
Nedbank economist Isaac
Matshego said there were
concerns about a possible EU/
UK economic slow down.
“Just under a third of all
our trade is with EU countries
and the UK accounts for
about 4% of our trade, so the
impact of a slow-down will be
relatively muted compared to
the impact of financial flows,
because when it comes to
traded goods it’s a small trading
partner – but when it comes to
financial flows the UK is very
important,” he said.
“We are more worried about
other EU economies slowing
down, not only the UK. Brexit
could knock business and
consumer confidence in the
EU and that could result in
weaker demand – and if that
happens it could probably mean
our exports to countries like
Germany and France could feel
it,” Matshego said. He added
that this would particularly
impact the automotive industry.
Vinod Madhavan, head
of transactional products
and services for Standard
Bank South Africa and
advisory board member of
the International Chamber
of Commerce’s Banking
Commission, said SA’s imports
and exports to 28 EU countries,
including the UK, totalled
R167bn in 2015, of which
R86bn were imports and R81bn
were exports.
He said exports
into Europe
accounted for
20% of SA’s
total exports
but traders
were already
looking to
South/South
trade with
countries like
Brazil, India
and China for
market growth.
“Trade between developing
countries has been growing at a
much faster rate,” he said.
He added that intra-Africa
trade was “very low” and
presented opportunities for
importers and exporters as
only between 10 to 12 percent
of trade in Africa was done
with SA.
“Intra-Asia trade is 40%
and intra-Europe trade is 60%.
Intra-Africa
trade is slowly
growing, there
is potential.
We need to
focus on how to
actually spend
more in South/
South trade and
in intra-Africa
trade,” he said.
FNB
economist
Jason Muscat
said SA currently had a positive
trade balance with the UK, one
of its top ten trading partners
and had exported R42 billion
worth of goods in the 12
months to May 2016 and had
imported R33.7 billion.
“On an overall basis we are
running a R9 billion trade
surplus so it is a very important
trading partner,” Muscat said.
About 39% of SA’s total
exports to the UK comprise
precious stones and metals,
while a substantial proportion
comprises edible fruits and
nuts, he said.
SA is also the UK’s most
important trading partner in
Africa but it will not be first
in line when it comes to the
country’s renegotiation of
post Brexit trade deals, which
economists say could take up
to two years, as countries in
the EU and the US will take
priority.
“Renegotiation is going
to take some time, there are
something like 20 000 rules
that need to be rewritten, so
SA importers and exporters
shouldn’t worry too much for
now,” he said.
INSERT & CAPTION
Just under a third of
all our trade is with
EU countries and the
UK accounts for 4%.
– Isaac Matshego