SA exports to Asia surprise

Johannesburg - Another solid performance by the South African export sector surprised the market on Thursday as it comes during a global recession and after a gloomy prognosis by the central bank on the local economic growth outlook.

But two factors seem to be the main ingredients behind this surprising trend. Firstly, trade with Asia continues to grow ahead of that with Europe, and secondly the trend in bulk export volumes from ports has been holding its own since the large decline in January.

Today's data shows that exports to Asia grew to R16.448bn in March from R13.154bn in February and well above the R14.980bn to Europe.

The year-to-date increase in bulk export volumes, meanwhile, is currently at an improved 2.32% from 1.73% in February and a mere 0.14% in January.

This means that concerns that South Africa's exports would suffer disastrously due to the global financial turmoil may have been slightly exaggerated.

Although January export data did show a dramatic drop of 25.3% month-on-month, ushering in a record trade deficit of R17.4bn, a massive surprise was in store in February and March when news broke of a trade deficit of just R571m and R512m respectively.

A comparison of the first quarter of 2009 with the first quarter of 2008 shows that exports to Asia have lifted by 4% to R40.843bn, while those with Europe dropped by 17% to R38.139bn.

It was thought that a comparatively weak rand would start improving South Africa's export potential at some stage this year if Asia, led by China, can bring about the next growth phase ahead of Western economies recovering, as China in fact does have the savings and investment potential in the midst of the crisis.

Trade in South Africa has picked up markedly over the past decade.

In 1998 exports only added up to R144.9bn and they ended 2008 at a very healthy R663.099bn by comparison, although an overall deficit of R64.5bn was seen. Exports in the first quarter 2009 registered R131.802bn from the R136.957bn, so on this basis there certainly are some signs of a slowdown, but it could be argued that this is not as severe as some forecasts had expected in light of the drastic manufacturing slowdown.

Precious and semi-precious stones and metals exports were the main surprise in March, as they lifted by a healthy R2.923bn.

Another good export performance came from base metals and articles thereof, which lifted R1.284bn. Mineral product exports improved by R946m.

The Asian story is certainly going to be a key one for South Africa's economy going forward as Europe and America limps along.

The central bank cut South Africa's repo rate by another 100 basis points on Thursday as it painted a gloomy picture of the economic backdrop and prognosis both locally and overseas.

- I-Net Bridge