Asia becoming SA's lifeline

A telling figure in April's foreign trade statistics is that imports have fallen 14.4% so far this year, while exports have only fallen 10.6%. It is thus interesting that many analysts are still bemoaning the huge fall in exports. Between January to April imports have dropped from R224.7bn in 2008 to R192.4bn in 2009. By contrast exports have only fallen from R192.4bn to R171.9bn.

The fact of the matter is that Asia is now SA's biggest export market and the Asian economy is hopefully going to be the lifeblood for SA during the global recession.

China has enormous amounts of cash and can thus stave off a recession by ploughing it into an infrastructure drive rather than putting the money into dodgy first world assets.

The latest data shows a fall in Asian exports in April of 16% after quite a big adjustment to March data. But it is still high at R13.8bn. By contrast, exports to the struggling US and European economies have fallen 27% and 19%, to R3.4bn and R12.1bn respectively.

Trade in South Africa has picked up markedly over the past decade. In 1998 exports only added up to R144.9bn and they ended 2008 at a very healthy R663.099bn by comparison, although an overall deficit of R64.5bn was seen.

Exports in the first quarter 2009 registered R131.802bn from R136.957bn, so on this basis there certainly are some signs of a slowdown, but it could be argued that this is not as severe as some forecasts had expected in light of the drastic manufacturing slowdown.

A reading of ports data ahead of today's April deficit print of R1.456bn was also enlightening.

South Africa's bulk export volumes dipped a marginal 0.25% year-on-year (y/y) in April, but gained 14.31% month-on-month (m/m) after dipping 0.27% y/y and -4.95% m/m in March. This small y/y decrease was well off the -12.22% y/y drop seen January this year.

The Asian story is certainly going to be a key one for South Africa's economy going forward as Europe and America limps along.

Perhaps all of the doom and gloom over the US and European slowdown hitting our real economy hard and leading to tears all round may just be a little overdone. Yes, times are tough and some testing times lie in wait, but that does not mean South Africans need to lose their hope and their jobs in droves as the real economy should keep ticking over thanks to government-induced growth via spending and continuing demand for products from Asia through the worst of the recession.

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