South Africa to release December balance of trade
South Africa’s balance of trade for the month of December is set to be released today.
Africa’s third-largest economy beat market expectations of $1.5 billion in trade surplus, rising to $2.4 billion in November, up from the $2.26 billion recorded the month prior. Prior to the pandemic, South Africa was already in a slump due to excessive bailouts of state-owned companies, which drained public funds. The pandemic has plunged South Africa into the deepest contractions in 90 years. As a result, the nation took out a $4.3 billion loan from the IMF.
Expect South African economists to work to rectify poor financial structures towards the goal of a budget surplus in 2026. However, the austere budgetary plans will likely elicit a backlash from workers’ unions as politicians have proposed cutting back on government subsidised salaries. Moreover, recent power cuts from the state-owned electricity company Eskom both demonstrate the impediments to economic growth and act as a signal to the government regarding improving the performance and efficiency of state-owned companies. With such obstacles ahead, the IMF has downwardly revised its growth projection from 3% to 2.8% for 2021.
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