Trade data for June and for January-June 2016

July 15, 2016

Bottom line:  The June trade data were undramatic, in that they continued to be negative, but not worse than previous months. If there is a silver lining it is that the pace of deterioration has slowed considerably, with exports falling only slightly (overall) and showing signs of stabilization, while the pace of increase in imports has also slowed.

Specifics:

  • On a seasonally-adjusted basis and after excluding diamonds, ships and aircraft, the deficit for June rose by only some $50mn, or 3%, to almost $1.7bn, far less than the rate and amount of increases in previous months.
  • The cumulative deficit for January-June 2016 was $7bn, compared to $4bn in the first half of 2015, and compared to $8.8bn for all of 2015.
  • In the key export sectors where weakness has been concentrated, there were signs of hope: pharmaceuticals exports in June exceeded those of June 2015, helping the overall high-tech sector to post higher June exports than in June last year. However, the weakness in the chemicals sector remained intense, with June exports down by 30% compared to June 2015.
  • Nevertheless, for the first half of 2016, total exports were 8.3% less than January-June 2015, led by high-tech and medium-high tech sectors, both of which were some 11% down on the year-earlier period. These two sectors account for some 80% of total exports.
  • Turning to imports, despite a 30% decline in fuel imports, total imports were up by 3.7% in the first half, compared to January-June 2015. Excluding aircraft, ships, diamonds and fuel, imports rose by almost 10%, led by consumer goods and investment goods.
  • Consumer goods posted a 12.4% increase over January-June 2015, with durable goods imports soaring by 19% — thanks to a 52% leap in vehicle imports. However, on a trend basis, the rate of increase in vehicle imports has fallen to zero and the rate of increase of other imports has also slowed considerably.
  • Imports of investment goods — a key indicator of future economic activity and growth — were 34% higher in January-June 2016 than in the first half of last year. Here, too, imports of vehicles led the way, but the rate of increase has declined sharply. Meanwhile, imports of machinery were up 16% and their rate of increase is rising.

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