South Africa’s unsteady and constrained trade environment
The trade environment in the country is especially volatile regarding employment and sales volumes, while input costs remain high.
South Africa’s trade environment remains unsteady and constrained, with 57% of respondents in a survey indicating that they experience negative trade conditions, while 56% nonetheless are still positive about trade conditions in six months’ time.
According to the South African Chamber of Commerce and Industry’s (SACCI) trade conditions survey for August, all trade elements, except for a slight easing in input costs, deteriorated between July and August.
However, input costs remained high, with 78% of respondents experiencing increasing input costs in August, with only 58% of respondents reporting rising sales prices which could indicate that inflationary pressures might ease further. Sales volumes and employment weakened the most of all the trade elements.
The wholesale and retail trade as well as the hotels and restaurants sector contracted by 1.2% compared to a year ago in the first half of 2023, confirming a constrained trade sector.
Regardless of the current inhibited trade conditions, the positive expectations for the next six months support a positive outlook on trade.
Retail trade remains under pressure
Recently released data shows that retail trade volumes remain under pressure (-1% year-on-year), while import volumes (plus 8.3% year-on-year for the first half of 2023) and export volumes (+3.7% year-on-year for the first half of 2023) and new vehicle sales experienced year-on-year improvements (+4.5%).
The number of visiting tourists increased by about 30%, but this was still 35% below the pre-Covid levels of February 2020. Electricity and water supply output declined by 6.5% compared to a year ago in the first half of 2023, weighing on trade activity and input costs.
Increasing debt servicing costs due to higher debt levels and higher interest rates are also adversely affecting longer-term investment decisions and resources.
The unsteady trade environment affects employment in the sector negatively, contributing to the decline of appointments between July and August 2023. The expected increase in appointments in the next six months still reflects a positive assessment of labour in the trade environment.