SACCI survey reveals mixed signals in South Africa's trade outlook

THE latest SACCI Trade Conditions Survey for February 2025 presents a nuanced picture of South Africa’s trade environment, showing both signs of improvement and lingering challenges.

Participants noted that trade conditions were better in February than at any time since mid-2024, following the formation of the Government of National Unity (GNU) in June last year. This change suggests that efforts by the GNU to enhance the economy are beginning to yield positive results.

In February 2025, 54% of respondents faced tough trade conditions, an improvement from 65% in December 2024 and 60% in January 2025. This easing of trade conditions indicates a gradual recovery, likely influenced by the GNU's economic initiatives.

However, expectations for the next six months are less optimistic, with only 56% feeling positive, compared to 75% in December 2024.

“The moderation of expectations most probably reflects the reality that although the reset of the economy is on the agenda of the GNU, the restoration process is not a quick fix,” the survey noted. This tempered outlook highlights the complexities of sustaining economic recovery in a fragile environment.

Positive changes were noted in several key trade areas. The sales volumes index rose from 41 in January to 47, signalling a slight increase in sales activity.

New orders, supplier deliveries, inventory levels, and sales prices also showed improvement but remained weak, below 50. Despite these gains, rising input costs and challenges in fulfilling orders continued to weigh down trade conditions.

“Rising input costs and delivering on orders impacted negatively on trade conditions in February,” the survey highlighted. These challenges underscore the need for sustained policy support to stabilise the business environment.

GDP data for the wholesale, retail trade, hotels, and restaurants sector showed a 1.4% decline in output for 2024. However, the last quarter experienced a positive shift with a 1.6% increase year on year, indicating a potential turnaround in this critical sector.

Certain trade activities showed positive movements: new vehicle sales jumped 7%, retail sales grew 3%, merchandise import volumes increased 10%, tourist numbers rose 8%, and the real value of building plans went up 8%, all year on year.

These indicators suggest that consumer spending and investment are gradually picking up. Conversely, merchandise export volumes fell by 5%, highlighting a significant area of concern for South Africa's trade balance.

Since imports account for 31% of domestic expenditure and exports represent 32% of local output, international trade remains vital to South Africa’s economy. The decline in export volumes underscores the need for strategies to boost exports and improve trade competitiveness.

Despite these mixed indicators, only 33% of respondents reported hiring more staff. However, 44% mentioned plans to hire more people in the next six months, reflecting cautious optimism amid uncertainty. This suggests that businesses are cautiously planning for potential growth despite the weaker trade outlook.

The SACCI survey, drawing input from members and non-members, advises readers to interpret results cautiously. It acts as a valuable measure of business sentiment, highlighting both progress and ongoing challenges.

As South Africa continues its economic reset with the GNU, the survey emphasises the importance of continuous policy efforts to tackle structural issues and create a stronger trade environment.

“The actions taken by the GNU to enhance economic performance are having a positive effect on the business environment,” the survey concluded, “but the restoration process is not a quick fix.”

This conclusion underscores the need for sustained policy support and patience as the economy navigates its recovery path. While recovery might be slow, the February 2025 data offers hopeful signs amid uncertainties.