South Africa’s terms of trade have fallen since their post-pandemic peak. Our terms of trade measure the purchasing power of South Africa’s exports relative to imports. Gold has played an important role in the long term increase, and a large part of the recent increase over recent years has reflected an increase in US dollar export commodity prices, particularly for platinum group metals, iron ore and coal. Stronger terms of trade raises national income, increasing fiscal revenues and supporting economic growth.
It is worth noting that alternative measures suggest that South Africa’s term of trade boom might have been much more modest than standard measures of terms of trade otherwise suggest (see here, here and here).
