JOHANNESBURG — South Africa’s external position deteriorated sharply in the second quarter, with the current account moving into a US$12.7 billion deficit as the country’s trade surplus narrowed dramatically and imports surged.
The current-account deficit widened to US$12.7 billion, equivalent to 2.6% of gross domestic product, from a surplus of 2.3% of GDP in the first quarter, according to data from the South African Reserve Bank.
The deterioration was significantly worse than expected. A Bloomberg survey of seven economists had forecast a deficit of about 1.3% of GDP.
The second-quarter shortfall was South Africa’s largest current-account deficit as a share of GDP since the third quarter of 2019.
The main deterioration came from the merchandise trade balance. The trade surplus fell to approximately US$9.0 billion, from US$26.5 billion in the first quarter.
According to BusinessTech, the value of goods and services exports increased by about US$5.7 billion during the quarter, reflecting higher prices and volumes. Imports, however, increased by approximately US$23.2 billion, driven by higher prices and volumes.
The deterioration coincided with the first full quarter to capture the effects of the conflict involving Iran. Disruptions and heightened geopolitical risks around the Strait of Hormuz, a critical global energy and shipping route, pushed up the cost of oil and fertiliser, adding pressure to import bills.
South Africa was already experiencing weaker economic momentum. Official data released earlier in the week showed that the economy contracted by 0.2% in the second quarter, ending six consecutive quarters of growth that had been supported in part by exports.
The country’s terms of trade also deteriorated during the quarter as import prices, measured in rand, increased faster than export prices.
The deficit on services, income and current transfers widened to approximately US$21.7 billion, from US$15.3 billion in the first quarter. As a share of GDP, the deficit increased to 4.5%, from 3.1%, its widest level since the second quarter of 2022.
The figures highlight South Africa’s vulnerability to global commodity-price shocks and geopolitical disruptions. Despite its substantial commodity-export base, a sharp increase in the cost of imported energy and other goods can rapidly erode the trade surplus supporting the country’s external accounts.
The combination of weaker domestic growth, deteriorating terms of trade and a sharply reduced trade surplus therefore leaves South Africa facing a more challenging external environment as it enters the second half of the year.
