Stronger global trade is expected this year and as reported by the World Trade Organisation (WTO), indicators like export orders and container shipping are on the rise at the beginning of 2017. Recognising the uncertainty on economic and policy developments, the WTO has still forecast an overall expansion in global trade.
Refrigerated exports recorded growth of about 7% compared to the first quarter of 2016, which Horn says is a reflection of a robust grape crop and strong demand in Europe for South African grapes. “Looking forward, the citrus crop, which represents more than 50% of South Africa’s refrigerated container exports, is expected to grow by 5-7% on the back of strong crops in the North, while crops from the Eastern Cape will likely decline.”
Looking specifically at imports, which represent 56% of total container flows, Horn says that while the market has grown by 2% year on year, it is still slightly lower than the 2013 level which represented significant growth. “Import growth in 2016 contracted by around 5% and the market has essentially rebounded from this poor performance. Import growth in the first quarter has been stronger than expected. This is linked to a more favourable rate of exchange that has made imports more affordable and allowed businesses to restock inventory at an affordable level.”
While this is a positive development, Horn says that only growth over a longer period will signify a sustainable rebound of consumer confidence and purchasing. “There is no clear evidence that consumer spending is on a sharp rise, and thus 5% growth is not likely to continue. Rather, a slightly lower 1-3% container import growth can be expected for the rest of year.”