C. Chakamera, L. Mapamba, and N. Pisa
Vol 16 | Issue 3, pp. 101-120
Abstract
The COVID-19 pandemic has caused significant disruption to global economic activity, global supply chains and international trade. Studies forecasting the impact of the COVID-19 pandemic on South African trade are sparse despite an increase in research on the pandemic. We investigated the effect of COVID-19 on South African export and import values by firstly analysing the effect of other past crises on trade using monthly trade data for South Africa for the period January 2005 to July 2020. Before the forecasts, we validated the forecasting power of ARIMA models in the presence of significant swings in trade. Thereafter forecast values for the period August 2020 to July 2022 were computed. Our findings reveal that the COVID-19 pandemic, like other supply chain disruptions of global proportion, will result in the contraction of South African trade. However, the country is more likely to report a positive trade balance. This will contribute to a positive balance of payments and exchange rates during the forecast period. Weak domestic demand may explain the inferior imports against exports predicted between August 2020 and July 2022. Despite the anticipated positive trade balance, weak domestic demand could also weaken the country‟s economic growth projections. The forecasts in this study may also be used by policymakers to anticipate tariff revenue from the different regions. It is also imperative for policymakers to advance bilateral trade agreements with Asian, European and African countries, the major export destinations. The African Continental Free Trade Area is a welcome strategy that may boost trade between South Africa and other African countries.
Keywords: Trade forecasting, supply chain disruptions, COVID-19, South Africa
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