Wednesday, 12 April 2017 12:00

Trade Expectations Weaken Notably

The seasonal adjusted six-month Trade Expectations Index (TEI) weakened notably and declined from 61 in February to 51 March 2017 – the weakest level since April 2016. The non-seasonal adjusted six-month Trade Expectations Index (TEI) weakened even more markedly and declined from 63 in February to 51 March 2017. The TEI was on a strong path of recovery from May 2016 up to February 2017. However, due to extraneous events, all components of trade expectations were severely and negatively affected in March 2017.
Forty four percent of the responses for the March 2017 Survey were received before the 24th of March 2017 recalling of the former Minister of Finance and subsequent replacement on the 31st of March 2017 in a Cabinet reshuffle. The March 2017 Survey may therefore not reflect the full short-term impact of the political developments of the last few days of March 2017. The subsequent downgrade to junk status by Standard and Poor’s and Fitch will also have longer-term repercussions for trade conditions.

Respondents indicated that financial stress, political and economic policy uncertainty, leadership in government, perceptions corruption, and a tighter export market, were some of the main causes for the weaker trade conditions.
The seasonally adjusted Trade Activity Index (TAI) also weakened further in March with a decline from 46 in February to 43 in March 2017. This is the weakest monthly level since February 2016. The non-seasonally adjusted TAI was down from 48 in February 2017 to 46 in March 2017 and was 2 index points lower than the figure of 48 in March 2016. In March 2017, the progress in trade conditions that had been experienced on a year-on-year basis from December 2016 to February 2017, appears to have been interrupted and may take time to recover.
The sales volumes index decreased from 56 in February 2017 to 52 in March 2017 while new orders dipped by one point to 43. The inventory index stalled at 40 after increasing to 48 in February. The selling price index increased to 61 from 52 and the input price index rose to 63 from 51 suggesting that more inflationary pressures returned in March 2017. Henceforth, inflationary expectations indices remained high at 71 and 75 respectively for the selling and input price indices.
The employment sub-index improved slightly from 45 in February 2017 to 48 in March 2017 as the political turmoil was too close to month-end to have an effect. However, the employment outlook in the trade environment for the next 6 months is a cause for concern as the employment expectations index dropped from 50 to 43.

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Alan Mukoki
SACCI CEO Cell: 082 551 1159
Richard Downing
Economist for SACCI Cell: 082 822 5566