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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
August 4, 2025

International Trade and Trade Balance

June 2025

International trade measures South Africa’s demand for foreign goods and services relative to its demand for domestically produced products in global markets. The country primarily exports raw materials, including base metals, gold, precious metals, and minerals, while importing value-added products such as vehicles, chemicals, and machinery.

In June 2025, South Africa recorded a trade surplus of R22 billion, indicating that exports once again exceeded imports for the month. In the first six months of 2025, total exports grew modestly by 0.6%, from R986.2 billion in 2024 to R992.2 billion. Meanwhile, imports declined slightly by 0.9%, from R919.5 billion to R911.3 billion, reflecting a slowdown in demand and increased caution among domestic consumers regarding imported goods.

Looking ahead, demand may see slight growth in 2025, supported by a further 25-basis-point interest rate cut announced at the end of July. Lower interest rates, along with low inflation, a relatively stable and appreciated Rand against the US dollar, and reduced consumer and producer inflation, could help boost domestic demand in the coming months.

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More Coverage

Producer Price Inflation

October 2025
In October 2025, producer price inflation rose to 2.9%, an increase from 2.3% in September. However, on a monthly basis, there was a slight decline in producer prices, down by 0.1%.

Retail Sales Performance

September 2025
Retail sales in South Africa rose by 3.1% in September, slightly exceeding market expectations of 3.0%, as anticipated by analysts for that month. This growth indicates a continuing recovery in consumer demand within the economy.

SARB Lowers Interest Rates as Stability Improves

The South African Reserve Bank (SARB) has taken a prudent and measured step by reducing its base interest rate from 7.0% to 6.75%, marking a significant moment in the country’s monetary policy trajectory. This decision, made by the Monetary Policy Committee (MPC), underscores the bank’s cautious optimism about South Africa’s economic outlook amidst a complex global backdrop.

Consumer Inflation

October 2025
In September 2025, the Consumer Price Index (CPI) saw a modest rise to 3.4%, slightly up from 3.3% in August, yet just below the analysts’ forecast of 3.5%.

Why Aluma does not Force an Interest Cut

Cautious Optimism Amidst Inflation and Reform Momentum
As the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) prepares to announce its interest rate decision later this week, market watchers are closely divided between expectations of a modest cut and maintaining the status quo. With approximately 70% of economists foreseeing a 25-basis point reduction from 7.00% to 6.75%, the prevailing sentiment reflects confidence in economic stabilization. However, a significant proportion remain cautious, suggesting that the SARB may choose to hold interest rates unchanged for another month, given the current inflation trajectory and recent developments in fiscal discipline.
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