Current Export Climate from a Global National and local perspective 16 October 2017

Introduction: Key Topics Why International trade? Global and National Economic Review & Outlook KZN Economic Review & Outlook International Trade: Global Trends South African Trade (Exports)

Why international trade? Macro-economic Framework: Relationship between exports and economic growth (GDP) Economic theory: Comparative and competitive advantage (David Ricardo & Adam Smith ) Specialisation and globalisation International trade: raising living standards, providing employment and enabling consumers to enjoy a greater variety of goods. (How?)

Why international trade? GDP = C + G + I + X – Z NX = X – Z According to the (World Bank, 2016), exports of goods and services accounted for 30.72% of the global GDP

Global economic review & outlook Table 1: World Economic Estimates and Projections, 2014 to 2018 Source: IMF (2017), & IHS Markit (2017)*

Global Economic Outlook The pickup in growth projected in 2017:Q1 - World Economic Outlook (WEO) is strengthening. Notable pickups in investment, trade, and industrial production, coupled with strengthening business and consumer confidence, are supporting the recovery (IMF, 2017). US: weakness in consumption in the first quarter turned out to be temporary, while business investment continued to strengthen, partly reflecting a recovery in the energy. UK: The slowdown is driven by softer growth in private consumption as the pound’s depreciation weighed on household real income. The medium-term growth outlook is highly uncertain and will depend in part on the new economic relationship with the EU and the extent of the increase in barriers to trade, migration, and cross-border financial activity. .

Structure of SA Economy Figure 1: Annual average sector contribution to SA GDP (1996 - 2016) Source: Own calculations using data from Stats SA (2017)

SA economic review Figure 2: Economic rowth rates in SA , 2014:Q4 to 2017:Q2 Recession Recession Source: Stats SA (2017)

SA economic review Figure 3: GDP and population growth rates (1996 – 2016) Source: Stats SA (2017)

Sector growth rates Table 2: Sector growth rates, 2016:Q2 to 2017:Q2 Source: Stats SA (2017)

KZN Economic Review and Outlook Figure 4: Economic rowth rates in KZN , 2014:Q1 to 2017:Q2 Outlook Source: Stats SA (2017) and IHS Markit (2017)

Global trend: GDP and trade Figure 5: Ratio of world merchandise trade volume growth to world real GDP growth, 1981 to 2016 (Annual percentage change and ratio) Source: WTO (2017)

International Trade Growth in the volume of world merchandise trade slowed to 1.3 per cent in 2016, down from 2.6 per cent in 2015, as continuing weakness in the global economy and low commodity prices had a negative impact on global import demand. The slowdown in world trade partly reflected the further weakening of investment spending, which is the most trade-intensive component of import demand.

Global trends: Trade Figure 4: Volume of merchandise exports and imports by level of development, 2012Q1-2016Q4 (Seasonally adjusted indices, 2012Q1 = 100) Source: IMF (2017)

International Trade Trade within the EU represented 63% of all EU total exports in 2015. Intra-trade totalled 50% in NAFTA, ASEAN (24%), SADC (18%) The top 10 traders in merchandise trade account for a little over half (53%) of the world’s total trade in 2016. Developing economies had a 41% share in world merchandise trade in 2016. Merchandise exports of WTO members totalled US$ 15.71 trillion in 2016. World exports of commercial services totalled US$ 4.8 trillion in 2016, up from US$ 2.9 trillion in 2006.

Global trends: merchandise trade Figure 5: World merchandise trade by major product grouping, 2006-2016 (US$ billion) Source: WTO (2017)

Exports – Global Trends World exports of manufactured goods increased from US$ 8 trillion in 2006 to US$ 11 trillion in 2016 (WTO, 2017) World exports of agricultural products increased by an average of 5% (2006 to 2016) World exports of fuels and mining products have declined by 10% since 2006

Global trends: merchandise trade Figure 6: World merchandise exports by major product groups, 2016 (Share, %) Source: WTO (2017)

Global trends: merchandise trade Figure 7: Economies by size of merchandise trade, 2016 Source: WTO (2017)

Global trends: merchandise trade Figure 8: Leading traders and world exports of merchandise trade, 2006-2016 (Indices, 2006 = 100) Source: WTO (2017)

Global trends: merchandise trade Figure 9: Top ten exporters of agricultural products, 2016 (US$ billion and annual percentage change, %) Source: WTO (2017)

Global trends: commercial services Figure 10: World trade in commercial services by category, 2006-2016 (US$ billion) Travel and other commercial services have increased the most, with both being 1.7 times higher than in 2006. Source: WTO (2017)

Global trends: commercial services Figure 11: World trade in commercial services by category, 2006-2016 (Index, 2006 = 100) Source: WTO (2017)

Global trends: commercial services Figure 12: Economies by size of trade in commercial services, 2016 Source: WTO (2017)

Global trends: commercial services Figure 13: Container shipping throughput index, January 2007 - February 2017 (Seasonally adjusted trend index, 2010 = 100) Source: WTO (2017)

Trade in SA Total value of exports in SA increased by 11% year-on-year to R103.4 billion, up from R93.1 billion in August of 2017 Exports in SA averaged R17.011 billion (1957 to 2017) The highest value of Export (105.2 billion) was recorded in June 2016

Trade in SA Figure 14: Composition of the export basket in SA, 2017 Source: IDC (2017)

International Trade Figure 15: South Africa’s main Trading Partners Source: IHS Markit, 2016

International Trade Figure 16: South Africa’s main trading partners, 2017 Source: SARS (2017)

Trade in SA Figure 17: SA’s main traded goods, May 2017 Source: SARS (2017)

Trade in SA Figure 18: SA’s export performance (R Billion), 2015 to 2016 Source: IDC (2017)

Commodity prices Figure 19: Commodity prices, 2007 to 2016 Source: SARB (2016)

Commodity prices Figure 23: Commodity prices, 2012 to 2017:Q1 Prices of most international commodities, especially those of energy and metals, decreased from the first to the second quarter of 2017 Source: SARB (2017)

Commodity prices Figure 24: International prices of selected South African export commodities Source: SARB (2017)

Structure of KZN Economy Table 3: Sector contribution to provincial Real GDP (R487. 861 billion), 2016 Source: IHS Markit, 2017

Exports by province Table 4: Exports as percentage of Real GDP by province, 2006, 2015 and 2016 Source: IHS Markit (2017)

Thank You JACOB TWALA