Johannesburg | Friday
WHILE the world economy is slowing, South Africa’s is actually doing very well, Tradek economist Mike Schussler said on Friday.
”The problem is that most South Africans are not getting this positive message and this is probably the fault of the economists and analysts,” he said.
”Our exports have grown at over 18% on a trade-weighted rand basis on a three-month moving average over the last 20 months, causing South Africa to have surpluses in the billions every month.”
Schussler said 2001 had seen ”a bit of a slowdown” in export growth to around 14%, but this still put South Africa in the top two countries in the world for the year.
The other country was China.
”But reading the comments made by analysts from Absa to JP Morgan the messages seems to be ‘this is a fluke’ or this is because imports have declined. Not only are these comments nonsense, they are 100 percent factually wrong.”
He said imports had grown seven percent in trade-weighted rand terms. Even taking the fall of the rand into account, imports were also showing relatively good growth.
Schussler said his research showed that over the last 20 months export growth — taking into account the rand’s decline — had not slipped below 10% on a two-month moving average basis.
”In fact export growth in real terms has not been negative at all for 25 months now.”
South African trade statistics got blamed for many things, he said, but checking some of the recent numbers left one with an impression of nothing less than a miracle.
”While Singapore, Taiwan and many other East Asian exports are in negative territory in dollar terms this year, South African exports are growing in double digits in dollar terms… The rand may be weak against the dollar but that has helped our exports so much that we are likely to have a surplus on the current account for the first time since 1994 –the arrival of the free trade era in South Africa.”
”Moreover the trade surplus is likely to be the strongest surplus since 1993 with both imports and exports showing real growth.”
Manufacturing items — narrowly defined — now accounted for 30% of South Africa’s exports, up from 10% in 1986.
Overall exports grew from around 17% to an expected 28% of gross domestic product (GDP), an increase of around 65% in fifteen years.
”These are similar… (to) increases that many of the Asian tiger economies had in their rush to economic growth over the last few decades. These Asian economies made the cover of Time magazine when this happened and were called miracles…”
Schussler said in many cases this export growth was financed by tax breaks (as in shipbuilding in Japan), low interest rates as in Korea, or by financing the pensions of workers, a type of labour subsidy.
South Africa’s headlines, by comparison, still read ”Rand weakens again”, or worse.
”Time magazine gives us the ‘honour’ of a front page — on the disaster of HIV/Aids on the economy. I know bad news sells fast but if analysts aren’t doing their job then I suppose journalists will never get the a real success story either,” Schussler said.
Adding imports and exports together and expressing this as a percentage of nominal market GDP is used to measure the openness of an economy.
By last year Reserve Bank figures show South Africa reached an all time high in openness of 52%.
”This year we should reach a new high while many other economies are backtracking on this measure. Furthermore according to the World Competitiveness Report, South Africa is the country in the world where the top three export destinations cumulatively make up the least of total exports.”
Exports were becoming more widely spread, as gold now accounted for around 15% of exports and not half as it did two decades ago.
”The export base has therefore not only expanded it has widened and deepened at the same time. This makes South Africa less vulnerable to commodity price swings — although not completely.”
”The export growth that South Africa is seeing today is nothing short of a miracle and needs a lot more publicity.” – Sapa