As business optimism across the globe remains depressed amidst a worldwide economic downturn, the outlook for trade on the UK/North West Continent route is not encouraging. With consumer spending down, exports and imports alike are expected to be seriously affected in coming months. According to Stanlib economist Kevin Lings, this was already apparent towards the end of 2008. “The growth in the country’s exports started slowing in the third quarter of 2008 to only 3.7%q/q compared with the 20.3%q/q in the second quarter of the year. Imports at the end of 2008 also reflected the general slowdown in the domestic economy.” As the world demand remains sluggish coupled with the slump in international commodity prices, economists are warning South African businessmen to tighten their belts and expect worse in coming months. Nedbank senior economist Dennis Dykes believes imports and exports will slow down even more in 2009. “As the impact of the global economic crunch really hits home, we will seriously start feeling the effects. The next few months are going to be a juggling game as companies are going to have to find ways of keeping their foot in the door while keeping the costs under control. We expect both imports and exports to slow down and don’t think there will be much growth in these sectors.” While on a traditionally fairly static trade like the UK and Europe the fluctuations will be less dramatic than on the Far East route, the impact can't be minimised. Most experts agree food products will continue to be exported as the South African standard of produce is highly regarded overseas. “But business is not happening as fast and smoothly as it usually does,” said Alistair Brickhill, managing director of trade consultants Brickhill Enterprize. “Deals are taking longer to conclude and we are finding that non-essential products are taking a knock. Volumes across the board seem to be down, and as the situation continues competition between companies is going to be very stiff as people fight for market share this year.” While most experts agree that imports have so far been stable, Dykes believes this will soon be something of the past as South African consumer spending decreases. “While many retailers publicly stated there was much spending over the Christmas period, we believe it was just a different pattern of spending. It is clear that 2009 is going to be a tough year.” Its a sentiment that many private companies share. According to trade consultant Grant Thornton International, a recent survey found that business optimism in South Africa had drastically decreased with only 35% feeling optimistic about the year ahead compared to the 75% last year as falling consumer demand and the shortage of business credit continues to weigh heavily on business owners.
