SA’s terms of trade – a ratio between export and import prices – remained in positive territory and improved for a record seventh consecutive quarter in the first quarter (Q1) of 2021. Commodity prices are the key driver here, and judging from the performance of the mining sector in April, that trend is set to continue.
When an economy’s terms of trade (TOT) are in the red, the calculation used by economists will add up to less than 100%. That effectively means the amount of capital leaving a country’s shores exceeds the amount coming in. When the TOT is in the black, its reading is over 100%, signifying more capital is coming in than leaving. That’s a good thing.
In its quarterly breakdown of the nation’s current account on Thursday, the South African Reserve Bank (Sarb) said the terms of trade had improved for the seventh consecutive quarter – a record run.
In Q1 of 2021, it reached 126.7 from 119.7 in Q4 of last year.
“The improvement resulted from a further rise in the rand price of exports of goods and services alongside a lower price of imports,” Sarb said in its usual clinical manner.
The balance on the…
Disclaimer: The Post Africa: South Africa’s Terms of Trade Consecutively Improve On Back of Commodity Bull Run was first Published by Daily Maverick on allafrica.com.