The South African Revenue Service (SARS) revealed that the trade index maintains a positive trajectory with a trade surplus of R8.99 billion for July. However, this is a decline from the previous month’s surplus of R10.7 billion. Performance on the trade balance is strengthened by improved global demand, which has seen an increase in export values compared to imports.
Domestic retail sales grew in the second quarter following a contraction in the first. This improvement in the trade, catering and accommodation industry, combined with improvements in mining and manufacturing output, will likely mean growth for the second quarter of the year. Furthermore, a decelerated inflation number of 4.6% reported for July was supported by lower petrol price and food inflation. This has brought much-needed relief - although temporary - for both households and businesses with Eskom’s imminent electricity tariff hike to be implemented in the near future.
Although there are improvements in some areas of the economy, the recent poverty trends and threat of job shedding in some sectors necessitate mitigating action from institutions and government.
We advise businesses to strategically incorporate the dynamics of this volatile economic climate into their models: existing legacy models should be integrated with newer systems, as the manner in which businesses position themselves will be the ultimate decider of success.