Hope for SA Economy

A strong rise in exports pushed the trade surplus for June 2010 to its highest level in almost seven years, Nedbank Group's economics unit said on Friday.

Earlier the SA Revenue Service (Sars) announced a trade surplus of R5.628-billion for June 2010, taking the trade balance for the second quarter to a R3.437-billion surplus.

Exports jumped by 17.8 percent month-on-month in June, while imports increased by 5.2 percent month-on-month.

During the second quarter of the year, exports rose by 14.3 percent quarter-on-quarter, while imports increased by 4.8 percent quarter-on-quarter.

Nedbank said the continued improvement in both exports and imports painted a brighter picture of the outlook for the local economy.

"However, it remains to be seen whether recent trends, particularly the strong increases in exports will be sustained in the coming months against the backdrop of a more uncertain global economic outlook."

The World Trade Organisation (WTO) had released its World Trade Monitor 2010, which shed further light on the extent of the slump in global trade during the global recession.

"World trade contracted by 12.2 percent in volume terms and was down by 22.6 percent in US dollar terms during 2009, the steepest contraction in 70 years," Nedbank said.

The slump in manufactured goods trade was particularly severe, dragged down by sharp falls in iron and steel, automotive products and industrial machinery.

"Global trade activity improved in the first half of this year but the outlook is more uncertain on the back of renewed financial turbulence."

Nedbank said the WTO projected a 9.5 percent expansion in global trade during 2010.

The latest trade figures from Sars did not change Nedbank's view that the local recovery remained fragile and might still suffer a setback as a result of Europe's economic troubles.

"Although we anticipate that the SA Reserve Bank will keep rates unchanged until the third quarter of 2011, a further drop in inflation and inflation expectations, coupled with more data pointing to the fragility of the recovery would strengthen the case for another rate cut."







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