Exports slump ' show ' must diversify

The devaluation of the euro and the persistent stagnation of demand for goods in Europe, one of the largest export markets of SA, apparently had difficult conditions for local exporters of artefacts in the region, trade and industry, Rob Davies said this week. The difficulties highlighted both the need for SA to diversify its trade relations and the problems caused by its strengthening rand, which has undermined a fundamental pillar of the plan of action of the Government's industrial policy-a stable currency and competitive.

This is considered as an important instrument for promoting industry development and export.

Another crisis

Davies Comments are in the wake of those made by the Minister of finance Pravin Gordhan last month when he warned the tax debt problems of the Organisation for economic co-operation and development countries could extend into another crisis and lead to a second wave of cuts trade and employment.

However, Davies admonished against too much pessimism in a written reply to a parliamentary question of Pierre Rabie of MP Democratic Alliance, saying that if the debt crisis of Europe was limited to Greece, Ireland, Spain, Portugal and Italy, as expected, the effect on exports of SA would be minimal compared to the credit crisis of 18 months ago.

The Department had worked on the diversification of export markets within the European Union (EU), with particular emphasis on Eastern European economies like these are expected to survive the crisis, he said."Since the onset of the crisis of European debt this year, the euro has depreciated by 6% against the dollar and 14% against the South African Rand.

Diversify relations

"Anecdotal information provided by exporters of goods manufactured in the EU suggest that the combination of depressed demand and the continued depreciation of the euro have made trading conditions harder. the Department continues to monitor the situation, but we believe that recent developments demonstrate the imperative for us to seek greater diversification in our trade relations," he said.

Davies said that the total of South African exports in Europe last year amounted to US $ 10, reach, representing 18% of all exports $ 7 .2bn are artefacts or 16% of total exports of SA production.

Export This figure declined last year by a high record of $ 11, reached in 2008. "Countries should be most affected by the debt crisis of the eurozone are Greece, Ireland, Spain, Portugal and Italy. Combined, these countries make up about 19% of exports of SA products manufactured within the euro zone. "

Source: business day

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