14 January 2021 – The pandemic had a big impact on trade in South Africa, particularly imports.
After a relatively strong start to the year, the value of imports slumped by the second quarter due to the disruption of hard lockdowns across the world on trade – also, the demand for South Africa’s biggest import product, fuel, dwindled as locals were forced to stay at home.
“In the year to the second quarter of 2020, imports declined by 26% while exports declined by 18%. Second quarter trade in 2020 is the lowest level of trade since the second quarter of 2012,” according to data from the Trade and Industrial Policy Strategies (TIPS) research institute.
Since then, exports have seen strong growth and South Africa is on track to maintain a solid trade balance this year, with exports exceeding imports.
By the third quarter, South Africa’s trade surplus hit R453.6 billion. A record high gold price has helped, as well as bumper agricultural exports, particularly for maize and citrus. This helped to counteract lower vehicle exports.
But demand for imports remained relatively subdued for the rest of the year amid weak demand in a shrinking economy – despite explosive growth in two categories.
Between April and June 2020, South Africa imported 23.2 million kilograms of non-woven fabrics – worth almost R5 billion – used in the production of surgical gowns, drapes, and face masks. Non-woven fabrics are defined as textiles which not woven or knitted but are instead bonded by chemical treatments. Due to its insulation, filtration, water repulsion, and sterility, non-woven materials are preferred for medical applications.
TIPS notes that, prior to the pandemic, quarterly imports of these fabrics rarely exceeded 700,000 kilograms.
The surge has been attributed to South Africa’s urgent need for face masks and surgical gowns. It’s estimated that, at the beginning of the outbreak, local manufacturers only had the capacity to produce 10% of the medical-grade masks required. Most non-woven fabric imports from China tapered off towards August as the need to supplement production in South Africa was sufficiently met.
Imported quantities of rice surged by 22% in the third quarter of 2020 to its highest level in eight years. Over 320 million kilograms of rice, valued at R2.9 billion, were imported into South Africa between July and September. This was due to pent-up demand after Thailand and India did not export rice for much of the second quarter.
The two countries account for more than 90% of all rice imported into South Africa. Both of these countries were hard hit by the Covid-19 pandemic, and reserved supplies for their domestic markets during the second quarter of 2020.
Additionally, due to lockdowns, India did not have enough labour to meet its export obligations and a poor rainfall saw Thailand’s crop estimates decrease. Restrictions were eased in the third quarter and South Africa – along with other African nations – redoubled its rice imports to make up for the early year lull.
TIPS notes that while mid-year restrictions were expected to have only limited short term consequences for consumers, disruptions to the supply chain and a strengthening Thai currency had caused rice prices to soar.
“Nevertheless, the prices of various staple foods have increased over the past few months, particularly in urban areas,” says TIPS. “For instance, the price of two kilograms of rice increased by R3.58 to R43.22 in July 2020, and the price of 2.5 kilograms of maize increased by R0.64 to R25.52 during the same period.”
According to data from TIPS, these were the top imported products in the first three quarters of 2020:
1. Crude Oil
3. Automotive components, car parts
4. Made-up articles of textile materials
5. Original equipment components for goods vehicle
8. Routers and set-top boxes
9. Cars and related vehicles: cylinder capacity 1 000 cm3 to 1 500 cm3
10. Movement of cash via bank notes, postage stamps and revenue stamps. Source (Business Insider)