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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
March 10, 2026

International Trade and Trade Balance – January 2026

South Africa recorded a R9.3 billion trade surplus in January 2026, as exports of raw materials continued to exceed imports of value-added goods. Exports increased while imports declined compared to 2025, reflecting relatively weak domestic demand. However, lower interest rates and stable inflation could support a gradual recovery in demand during 2026.

International trade measures South Africa’s demand for foreign goods and services relative to its demand for domestically produced products in the global market. The country predominantly exports raw materials, including base metals, gold, other precious metals, and minerals, while importing value-added products such as vehicles, chemicals, and machinery.

In January 2026, South Africa recorded a trade surplus of R9.3 billion, indicating that exports once again exceeded imports. Over the last three months ending January 2026, exports have grown by 3.9% compared to the same period in 2025, from R488 million in 2025 to R507 million in 2026. Meanwhile, imports declined by 4.0%, from R457 million in 2025 to R437 million in January 2026. This reflects the nature of relatively low international demand from South African businesses and consumers at this stage.

Looking ahead, demand is expected to grow slightly in 2026, supported by the 25-basis-point interest rate cut announced at the end of November 2025, which will take full effect just yet. Lower interest rates, coupled with low inflation, a relatively stable and appreciated Rand, albeit under pressure as of late, against the US dollar and stable consumer and producer prices, could help to stimulate domestic demand in the coming months.

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More Coverage

The Fuel Shock Dilemma: Why the SARB’s Inflation Medicine May Hurt a Fragile Economy

For South African businesses and households already managing a tight financial squeeze, the South African Reserve Bank’s (SARB) recent decision to hike the repo rate to 7.0% felt less like economic medicine and more like a handbrake. While central banks traditionally raise interest rates to cool down an overheating economy, South Africa’s current reality is vastly different. Our recent inflation spike isn’t driven by a wild shopping spree, but by global supply shocks and an imported energy crisis. This begs the crucial question: is the SARB using the wrong tool for the job, and at what cost to our fragile economic growth?

The Core Dilemma: Demand vs. Supply and Interest Rates

The case for holding interest rates is strong, as South Africa’s current inflation is being driven by global supply-side pressures like fuel prices, not excessive local spending. Raising rates now would place additional strain on already struggling consumers and businesses without addressing the real cause of inflation. With the Rand strengthening, oil prices stabilising, and diesel costs expected to decline, natural inflation relief is already emerging. Since inflation remains within the SARB’s target range, increasing borrowing costs could unnecessarily slow economic growth and job creation.

A view on Demand in the Economy: Retail Sales performance – March 2026 Data

Amid a turbulent economic backdrop, South Africa’s retail sales surged by an unexpected 2.6% in March 2026, outpacing forecasts and signalling a fragile yet persistent recovery in the consumer market. While interest rate cuts have bolstered household spending, challenges such as rising inflation, potential interest rate hikes, and geopolitical tensions loom large. Despite these hurdles, sectors like “other retailers” and general dealers have notably contributed to this growth spurt, raising questions about the sustainability of this recovery. With business and consumer confidence indices displaying mixed signals, the future of South Africa’s retail strength hinges on international relations, fuel costs, and policy decisions. Explore the dynamics and implications of these developments in our detailed report.

Consumer Inflation Rate – 2026

In an insightful analysis of South Africa’s economic landscape in April 2026, the report delves into the notable 4.0% year-on-year increase in the Consumer Price Index, accentuated by surging costs in housing, utilities, transport, and financial services. Amid rising inflationary pressures fuelled by global uncertainties, including the Middle East conflict and climbing oil prices, the South African Reserve Bank faces critical decisions on interest rates to balance inflation and economic growth. As households grapple with diminished purchasing power, the precarity of reliance on short-term credit looms large, while international factors such as US-imposed tariffs and potential BRICS trade tensions threaten market stability. The report provides a comprehensive look at the delicate dance South Africa must perform to maintain price stability and safeguard the Rand amidst a challenging global backdrop.

The SARB’s High-Stakes Tightrope: Balancing an Inflation Breach Against a Jobless Crisis

Next week’s SARB decision could define South Africa’s economic trajectory: facing an external oil shock and runaway electricity tariffs that threaten to push April inflation past the central bank’s 4.0% ceiling, policymakers must weigh a technical inflation breach against a staggering surge in unemployment and collapsing investment, a choice between credibility and survival. With joblessness spiking and GDP growth stagnant, aggressive rate hikes would risk choking off the private investment the country urgently needs, while inaction could dent the new inflation-targeting framework. Read the full report for a detailed breakdown of the shocks driving this dilemma, the likely “hold” outcome from the May 28 MPC meeting, and what it means for businesses, households, and markets.