SA is coining it everywhere: ‘Monster’ trade surplus

Perhaps it is because spring – that time of eternal optimism, revival and new growth – is just around the corner. Perhaps it is because we’ve proved at the Olympics, and on the rugby field, that we’re world champions.

There should be a new positivity in the air today. Sport is the emotional icing on the cake, but one cannot deny that, as our story says today, our economy has been doing some amazing things in recent months. 

We’ve just recorded what one economist calls a “monster” of a trade surplus – of R57.7 billion for June. That means we exported that amount more than we imported.

That is an incredible balance of payments news, reversing many months of trade deficits. The trade surplus has been driven by a number of things, including healthy high prices for our mineral exports, coupled with a lower demand for imported goods.

That record-high income from exports has, in turn, generated a huge tax windfall, which has lifted government revenue at just the right time.

The positive development has made it possible for National Treasury to announce a R39 billion economic relief package – to be funded by the higher-than-expected tax revenue – with the lion’s share of the funds going towards reinstating the R350 social distress grant for the unemployed.

But this is no time for back-slapping or relaxing. 

Higher rand revenues for exports are because the rand has devalued dramatically recently – mainly because of the unrest.

That means we will be paying more for our imports when demand again picks up. We are going to feel the first of that pain this week as fuel prices rise.

The surplus is also a warning about being too reliant on commodity prices to save us.

Resources will eventually dwindle, so we need to diversify the economy now.

NOW READ: How the mining sector gave SA’s economy an unexpected boost