Possibly a breather in upward
trajectory, writes Alan Peat
THERE'S BEEN a slump in SA's high-riding trade figures in April, but probably only a breather in what is still an upward trajectory, according to Goolam Ballim, economist at Standard Bank.
This bad news, he added, was possibly partly disguised by the healthy April trade surplus of R2.52-billion.
But, Ballim told FTW, this masks a slump in both imports and exports - with exports declining by R2.23-bn against the March figure, while imports fell by a larger R3.02-bn.
The drop in exports was led by precious and semi-precious metals (down R820-million); mineral products (-R445-m); foodstuffs (-R431-m) and vegetable products (-R129-m).
Imports, meantime, were dragged down by machinery and electrical equipment (-R980-m); and chemical products (-R514-m). Also, vegetable products; plastics; textiles and precious and semi-precious metals - which all declined by about R100-m for each category.
But, said Ballim, exports during February and March were quite robust, and April's decline is probably a breather in what is a still an upward trajectory.
While the rand should appreciate from current levels of around US$1/R7 over the short-term, it is unlikely to entirely recoup its 15% decline since early January.
This should stimulate export growth over the coming months.
Queried on the import decline, Ballim attributed it to the subdued pace of consumer demand growth - and the higher cost of foreign goods, due to the weaker rand.
Also, he said, due to the uncertain interest rate outlook, business confidence is declining - and, therefore, impacting on firms' willingness to invest.
The April slump followed a healthy eight-month burst in imports during the last quarter of 1999 and the first quarter of this year. This is the result, according to Ballim, of firms preparing for a surge in consumer spending - which has failed to materialise up to now.
However, he told FTW, imports should begin to rise as inventory holdings decline and consumer demand gathers momentum.
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