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Following the subdued trade surplus of R1.2Bn in April, the country posted a trade surplus of R3.5Bn. The results are well within the historic activities:
Weakening of the Rand
The beginning of Q2 saw the Rand weakening against the Dollar. As a consequence, exports have been stimulated and the cost of imports has increased.
Increase in oil prices
Along with the weaker currency, the country has seen a substantial increase in oil prices in May leading to further compressed trade activity in relation to the previous year where the country posted a surplus of R7Bn.
The potential return of business confidence and customer spend
The Producer Price Index (PPI) reported for the month of May signals less pressure on consumer goods prices over the near to medium term.
Additionally, the key determinants of the medium-term upside risk to SA’s economic growth will be the extent to which business confidence recovers, how it will compel strong private sector investment and the extent to which moderated inflation and steady interest rates induce consumer spending.
Caution should however be placed on high fuel prices that are likely to have inflationary pressure on goods prices and cause monetary strain on consumers.