According to data from Statistics South Africa (Stats SA), in May, South Africa's export prices continued to rise faster than import prices. This trend confirms the country's positive trade position, which was recently noted by the South African Reserve Bank in the first quarter.
Stats SA's indices of value volumes for exports and imports showed that export prices increased by 11.8% compared to May of last year and by 0.5% compared to April. Meanwhile, import prices fell by 3.1% year-on-year and by 0.5% month-on-month.
In its latest Quarterly Bulletin, the Reserve Bank noted that higher export prices and lower import prices contributed to an improvement in South Africa's terms of trade in the first quarter, leading to an increase in the trade surplus. The newest value volume indices indicate that these favorable trade conditions persisted in May as well.
This data comes amid warnings from economists that growth this year is likely to remain moderate, around 1.2%, as global uncertainty and consumer pressure continue to negatively affect economic activity. Independent economist Eliza Kruger noted that although the signing of a framework agreement for peace between the United States and Iran in June helped reduce some global tensions, uncertainty continues to impact business and consumer confidence.
Kruger added that many remain cautious, postponing investment and spending decisions, which is reflected in the weaker economic activity recorded in the second quarter. The statistics agency reported that manufactured metal products, machinery, and equipment contributed the most to the annual growth in export prices, accounting for 11.4 percentage points of the total increase. On the other hand, the decline in prices for this same category was the main factor in the annual drop in imports.
Other recent indicators paint a mixed picture of the economy. The S&P Global South Africa Business Manager Index rose to 50.5 in June, signaling modest expansion. Naamsa reported a 15.3% year-on-year increase in car sales. However, the Absa Business Manager Index fell to 47.3, indicating persistent weakness in domestic demand. The value volume indices for exports and imports are based on customs data from the South African Revenue Service and track changes in the prices of goods moving across South Africa's borders, providing an early signal of trends in the country's trade environment.
