In terms of output, South Africa’s economy is the second largest on the continent after Nigeria. From an airfreight and container shipping perspective, South Africa is the most important market. Annual air cargo traffic is in the order of 350,000 tonnes, while container throughout at main ports has been around 4 million TEU per year. Economically, South Africa has had a bumpy ride over the past decade, and this is also reflected in international trade figures. However, 2022 performance was good with trade value growing at 9.5% overall. 2023 expectations point towards further growth, although the current power crisis could derail this.
Trade Developments to the End of 2022
In 2022, air accounted for about 20% of the value of South African trade, while sea freight and road accounted for 67% and 12%, respectively. Excluding bulk commodities such as coal or other mining products, air accounted for about 27% of the value of trade and 5% of total weight.
From an airfreight perspective, around two thirds of the continent’s cargo volumes are handled through four airports – Nairobi, Johannesburg, Addis Ababa and Lagos. For 2022, Johannesburg is expected to handle around 350,000 of cargo. While this represents a growth of 14% compared to 2021, it is far below peak volumes in 2018, where the airport handled over 400,000 tonnes. As South Africa’s economy has struggled, so to have air cargo volumes.
Container traffic shows a similar trajectory, with TEU handled across South African Ports peaking in 2018 at about 4.9m tonnes and dropping to about 4 million TEU in 2020. 2021 and 2022 saw further declines in connectivity levels at the two main ports in Port Elizabeth and Durban (see also our recent analysis on port connectivity).
Overall trade value in 2022 grew by approximately 9.5%, but much of that growth was front loaded to the first three quarters of the year (see Figure 1).
Excluding bulk commodities and precious metals and minerals, trade grew by around 6% in 2022, with imports growing at 9% and exports remaining essentially flat (see Figure 2)
While many Southern and Eastern African air cargo markets are primarily perishable export driven, South Africa is primarily and import driven market. This is the reason why many Europe to Africa routings include South Africa on Southbound flights and combine the Northbound with a stop in Nairobi to collect perishable exports.
Overall trade by air declined by 1.2% in 2022, but exports were up slightly by 0.5% (See Figure 3). Air cargo traffic data for the first 10 months of 2022 shows a bigger increase of about 20% year on year tonnes handled at Johannesburg airport.
However, much of the decline in air trade was associated with a drop in pharmaceutical, which peaked towards the end of 2021 due to COVID vaccines delivered from Europe and the United States (see Figure 4)
Most other segments did well, including automotive related shipments which traditionally are important to both North and Southbound cargo on South African flights (see Figure 5).
Trade value by road to neighbouring countries increased by approximately 6% in 2022, with DRC, Zambia and Zimbabwe posting the highest growth rates (see Figure 6).
Imports and Exports by sea grew by 9%, particularly driven by imports from China which grew by almost 18% compared to 2021 (see Figure 7). This is somewhat in contradiction to maritime connectivity figures but is also mirrored in Chinese export statistics that show value growth of 15% to South Africa and 19% to Southern Africa overall.
Trade Outlook 2023
South Africa’s economy has generally experienced low growth in the past seven years. Growth rates between 2015 and 2019 were between 0.3% and 1.5%. After a decline of about 6.3% in 2020, GDP growth was 4.9% in 2021 and the estimate for 2022 is 2.6%. This is lower than the world average in those two years of 6% and 3.1%, respectively. In January 2023, IMF forecast growth of 1.2 % in 2023 and 1.3% in 2024, again below the world average of 2.4% and 2.5%. However, contrary to other economies, the growth of the South African economy was not downgraded since the previous October 2022 forecast.
Nevertheless, overall South African exports and imports in 2023 are forecast to grow by 4.6% and 5.2%, respectively. This is higher than the world average, and better than the forecasts for Nigeria and Ethiopia. Figure 8 provides a comparison of forecast import and export growth, with the size of the bubble showing the relative size of each economy.
Other indicators also point to reasonably positive near term expected performance. Manufacturing activity has generally been positive over the past two years and forward expectations point to continued expansion.
The forecast for overall industrial production also foresees expansion of between 1.2 and 2% for the last three quarters of a year, following moderate contraction of 0.5% in the first quarter. Of course, where there is no power there is no production….
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