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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
February 5, 2025

International Trade and Trade Balance

South Africa recorded a trade balance surplus of R15.46 billion in December 2024, where exports exceeded imports. While annual figures showed declines for both, there is optimism for 2025 as lower interest rates and easing infrastructure bottlenecks could enhance trade activity and support economic growth.
International Trade and Trade Balance graph, Aluma Capital (Pty) Ltd
International Trade and Trade Balance table, Aluma Capital (Pty) Ltd

International trade measures South Africa’s demand for foreign goods and services against the demand for domestically manufactured products in global markets. The country mainly exports raw materials, such as base metals, gold, precious metals, and minerals, while importing value-added goods like vehicles, chemicals, and machinery.

In December 2024, South Africa achieved a trade balance surplus of R15.46 billion, indicating that exports exceeded imports. However, on an annual basis, both exports and imports declined, with exports contracting by 1.4% and imports dropping by 6.5%. The decrease in imports from November suggests subdued demand after Black Friday purchases, while exports also saw a notable reduction during this period.

Compared to the same months in 2023, the value of exports and imports for November and December 2024 was lower, despite lower interest rates and a similar Rand/Dollar exchange rate. Moving forward, there is hope that the South African economy will build on the confidence gained in 2024, particularly with lower interest rates and a reduction in infrastructure bottlenecks affecting international trade at port and rail facilities.

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More Coverage

Budget Speech 2025

A Balancing Act
Much has happened in the last twelve months as well as the last month since the postponement of the February 2025’s budget. The big talking point and “bone of contention” was the mooted 2% increase in VAT. This increase was met with fierce resistance and made “balancing the budget” quite difficult, as the government has to decide between increasing taxes of cutting expenditures, leaving the Government of National Unity (GNU) between a “rock and a hard place” as it currently stands. The increase in VAT or other taxes sprout from the various expenditure items the government announced or want to implement which among other things include the National Health Insurance (NHI), a transformation fund and continuation of the Covid-19 relief grant and the possible introduction of a Basic Income Grant (BIG).

A View on Company Profits

2024 Q4
Company profitability is vital for investors and the government. In South Africa, the Gross Operating Surplus (GOS) indicates positive growth, with profits surpassing inflation in late 2024. Notable gains in the Agricultural sector (68.8%) contrast with modest growth in Mining and Personal Services, reflecting an optimistic economic outlook post-election.

A Sticky Affair

The South African Budget Speech Postponement
The Laffer Curve is an economic theory that describes the relationship between tax rates and tax revenue. Proposed by economist Arthur Laffer, the curve suggests that there is an optimal tax rate that maximizes government revenue without discouraging productivity, investment, and economic growth. The central idea is that increasing tax rates beyond a certain threshold can lead to diminishing returns; higher taxes may disincentivize work, entrepreneurship, and investment, ultimately reducing the overall tax base.

GDP, Economic Growth and Inflation

2024 Q4
The South African economy showed resilience with a 0.6% growth in the fourth quarter of 2024, despite challenges. Key sectors like Agriculture and Finance thrived, and improved consumer demand signals optimism for 2025. With continued market confidence and government reforms, there is potential for significant economic advancement ahead.

Private Sector Credit Extension (PSCE)

January 2025
In January 2025, credit demand rose by 4.6%, exceeding expectations, although overall demand is still modest. Interest rate cuts are expected to enhance property and asset purchases as disposable incomes improve. As consumers increasingly rely on credit, overall demand for goods and fixed assets is poised to rise throughout 2025
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