Cape Town: With the continued gloomy outlook in Eurozone countries and a slow down in growth in a number of developing economies, a rapidly growing Sub-Saharan Africa holds clear opportunities for South African businesses, the Minister of Finance Pravin Gordhan said on Thursday.
Tabling his Medium Term Budget Policy Statement in the National Assembly today, Gordhan said opportunities in sub-Saharan Africa had benefited many South Africa mining, manufacturing and retail companies.
The IMF’s World Economic Outlook, released earlier this month, estimates that sub-Saharan Africa will grow by 5% this year and 5.7% next year – this compares to growth of just 1.3% in advanced economies and 5.3% in developing countries this year.
While exports to the EU fell 0.9%, while those to the US remained flat and those to China and India grew by just 1.1% and 0.7% respectively, exports to Southern African Development Community (SADC) countries grew 2.7%.
Gordhan said SADC was now South Africa’s second largest export market after the EU – expected to account for 21% of exports this year.
The SADC region is expected to account for 12.2% of exports this year, up from 9.8% in 2000 and putting it just ahead of China which the National Treasury expects will account for 12% of SA exports this year.
The Medium Term Budget Policy Statement says the share of manufactured exports to the region (21.8%) have increased rapidly over the past few years – on the back of demand in chemical products, machinery and appliances, particularly mining equipment.
It says with strong growth forecast for the next five years, the SADC region could become South Africa’s biggest market for manufactured exports.
Meanwhile, export volumes fell by 6.3% in the second quarter compared with the same period last year, after a decline of 1.5% in the first quarter.
Over the first eight months of the year, the value of exports of platinum fell by 21.9%, while exports of coal and chemical products remained robust.
In the first eight months of the year, however, imports increased by 20%, driven by strong increases in oil, machinery, vehicles and appliances.
Imports are now 4% above 2009 levels, while exports are 13% below their highs.
With the fall in exports and rise in imports, the current account deficit has widened sharply over the past year and is expected to average 5.9% this year, up from 3.3% in 2011.
Over the next three years, the current account deficit is expected to moderate to 5.5%.