The collapse in the international oil price since early October 2018 should mean that South Africa in 2019 improves on its 2018 foreign trade surplus of R11.3bn, but it is unlikely that it will achieve the R76.7bn surplus of 2017.
The OPEC basket price dropped from a monthly average of US$79.58 per barrel in October 2018 to $56.94 in December 2018 before rising slightly to $58.63 in January 2019.
The fall in the oil price is reflected in the mineral import category, which fell to R17.9bn in December from R21.4bn in November and R23.8bn in October. If the monthly mineral import stays at R18bn for the whole of 2019, then this would result in fall to R216bn from the R233bn in 2018, but it will still be above the R167.7bn of 2017.
The oil price fall resulted in Saudi Arabia and Nigeria, the countries from where South Africa imports most of its oil, dropping to fourth place and fifth place respectively in December from third and fifth place in October. As a percentage of imports the decline was even more dramatic as Saudi Arabia’s share almost halved to 4.8% from 9.2%, while Nigeria’s share dropped to 4.3% from 4.5%.
The result was that total imports dropped to R85.6bn in December from R115.4bn in November and R125.9bn in October, while over the same period exports eased to R102.8bn in December from R121.6bn in October.
December has historically been a large surplus month as imports have fallen more than exports compared with the November data. In December 2017 the surplus was R14.5bn, but this rose to R17.2bn in December 2018.
The key month going forward is January, as January 2018 saw a record R27.1bn deficit, but that is unlikely to be repeated in January 2019.
This contribution to Finance Friday was made by
Forecaster Ecosa cc
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