‘Trade surplus hints at consumer strain’

Economist George Glynos warns that the improved import to export ratio may be an illusion.

Economist George Glynos warns that the improved import to export ratio may be an illusion. Picture: File.

JOHANNESBURG - South Africa's economy experienced an unexpected trade surplus of R1,72 billion in February after a nearly R17 billion shortfall in January.

The South African Revenue Service (Sars) revealed that exports in February climbed 7,9 percent to R83,93 billion, showing that the weak rand had its benefits, with foreign customers scrambling for South African goods.

On the other hand, imports to South Africa fell by 13,2 percent to R82,21 billion.

While this could be interpreted to mean that South Africa is now less reliant on imported good, ETM Analytics Economist and Managing Director George Glynos says the truth may be less positive.

He says the trade surplus is certainly a move in the right direction, particularly as this is the third in four months.

But it doesn't necessarily mean it's time for South Africans to celebrate.

"One also needs to bear in mind why this happened," Glynos says, noting the massive drop in the import rate

To him, that drop doesn't mean consumers have become less dependent on foreign goods.

Rather, South Africans simply can't afford them.

"That speaks to a household which is struggling and is probably going through a retrenchment of consumption of sorts."

Glynos also says the rise in the export figures aren't necessarily what they seem.

He explains that a weaker rand by definition makes export numbers look higher.

"It isn't necessarily a reflection of the amount of goods that we are exporting so much as it is a reflection of the rand price of those goods. In other words, it's not that we're exporting more, it's just that we can repatriate those foreign earnings into rands at a higher rate."