Sacci warns of declining trade conditions in South Africa amidst economic uncertainty

The South African Chamber of Commerce and Industry (Sacci) has issued urgent warnings following the release of its Trade Conditions Survey for June, which revealed a concerning contraction in trade conditions.

Sacci on Wednesday reported that the trade environment was increasingly strained by global trade uncertainty, coupled with domestic economic challenges such as sluggish growth and soaring unemployment.

The survey highlighted a significant downturn: trade conditions fell from a promising positive stance in March and April back into negative territory by May and June.

According to Sacci, 56% of respondents reported positive trading conditions in March, yet this figure reduced dramatically with only 46% maintaining optimism in May and June.

“Despite the downturn, a slight majority—51%—indicated that trade conditions in June 2025 were better than during the same period in 2024,” noted Sacci.

With regard to future prospects, Sacci observed a diminutive drop in optimism as well as 62% of respondents in June anticipated an improvement in trade conditions over the coming six months compared to a more encouraging 69% in May.

The data suggested a growing unease regarding the short-term trade outlook, reflecting concerns over the sluggish local economy and external uncertainties.

Sacci attributed the unfavourable trade outlook to the disappointing performance of the domestic economy, which has been compounded by the tactical responses anticipated from global trading relations.

“It remains essential that efforts to improve local economic performance are intensified,” they stated. While consumer inflation was stable at 2.8% in May and producer inflation remained low at a mere 0.1%, a recent increase in fuel prices looms large,” it said.

“However, the strengthening of the rand against the US dollar by about 1.5% in June mitigated even greater price impacts.”

Concerns persist with rising municipal tariffs and property taxes, which threaten to distort inflation expectations and the prospects for a decrease in interest rates.

Sacci also noted that real interest rates remained uncomfortably elevated, contributing to the deteriorating five-and-six-month trade outlook, with expectations of lower sales volumes and dwindling supplier deliveries.

The data reflected a significant decline in positive sentiment from 75% in December 2024 to just 65% as of June 2025.

While the survey forecasts continuing challenges, it also highlighted a few silver linings.

Recent statistics revealed an uptick in new vehicle sales (+18% year-on-year), retail sales (+5% year-on-year), and incoming overseas tourists (+3% year-on-year), alongside a 3% rise in merchandise import volumes—indicating some positive trade developments.

However, the sceptical view continued with stark declines in key sectors such as merchandise export volumes (-10% year-on-year) and the value of building plans passed (-16% year-on-year), suggesting a perplexing disparity among various trade activities. 

Waldo Krugell, an economics professor at the North-West University, said Sacci's Trade Conditions Survey was another indicator of economic growth slowing in 2025 and weak prospects for growth going forward.

“The consumer-facing parts like vehicle sales, retail sales and inward overseas tourists have a bit of life left in them, but for exports and construction conditions have deteriorated,” Krugell said.

“For the moment there is not much any can do to the tariff headwinds, but domestically government should really be looking for quick wins in their reform programme to try and restore business confidence.”

Krugell said progress at Transnet and the harbours will make a big difference to sentiment.

“Deregulation to reduce the cost of doing business for SMEs is frequently talked about and can be done quickly and with little cost to the fiscus. They just need to get it done.”

Efficient Group chief economist, Dawie Roodt, said it was no surprise that the trade conditions deteriorated.

“There are a number of reasons for that but contributing factors include what recently happened with the new tariffs against South Africa as well as the continuous instability in the government of national unity. I'm afraid trade conditions can deteriorate quite significantly over the next couple of months, of course, depending on things like tariffs and politics,” Roodt said.

“So that means that the economy kicked off quite weak this year, and is likely to remain so, and it's even possible that we can dip into a recession. Radical policy changes are needed to get this economy to grow again.”

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