Current account deficit held broadly steady in first quarter

SA’s current account deficit improved marginally in the first quarter, narrowing slightly to R35.6bn, from a revised R39.3bn in the fourth quarter of 2024. As a percentage of GDP, the deficit remained unchanged at 0.5% from the previous quarter.

This is according to data published by the SA Reserve Bank on Thursday.

The current account is a key measure of SA’s trade and financial interactions with the rest of the world, reflecting the balance between what the country earns from exports and receives from abroad, and what it pays out for imports, services and investment income — a deficit signals that more money is leaving the country than coming in.

One driver behind the overall improvement was a smaller deficit on the services, income and current transfer account.

The shortfall of this account narrowed from R265.7bn in the fourth quarter of 2024 to R256.8bn in the first quarter. These smaller deficits outweighed the wider deficit on the current transfer account, the Reserve Bank said. As a percentage of GDP, the account narrowed from 3.6% in the fourth quarter to 3.5% in the first quarter.

The country’s terms of trade — the ratio of export to import prices — improved over the quarter, as the rand price of exported goods and services increased more than that of imports. This helped soften the impact of the reduced trade surplus and provided a modest tailwind to the current account.

The marginal improvement in the current account balance came despite a slight decline in the trade surplus, which narrowed to R221.2 bn from R226.4 bn in the previous quarter. Export values rose in the quarter, supported by stronger global prices and higher volumes, but import growth outpaced exports.

As a percentage of GDP, the first quarter’s trade balance surplus was 3.0% (in line with the fourth quarter’s revised figure).

“We could see the trade account surplus decreasing further ... Globally, heightened levels of uncertainty around tariffs persists,” said Lara Hodes, Investec economist.

The trade surplus narrowed in April as exports declined and imports rose. 

The latest Absa PMI survey report stated that export sales continued to deteriorate “at a rapid rate”, weighed down by regional trade disruptions, trade policy uncertainty and ongoing port inefficiencies.

Nedbank economists said they expected imports to outpace exports in 2025, driven by a more favourable domestic environment.

“Subdued inflation, higher real incomes and, to some extent, a resilient rand will continue to bolster import demand.”

Exports, however, face notable downside pressures “due to a weaker, uncertain, and generally volatile global economy”.

“Export demand will ease on slow growth in key trade economies and softer commodity prices. Although modest improvements in local logistical networks and a robust gold price should partially offset these pressures, exports will be likely to remain weak,” Nedbank said.

The bank said it therefore expected the current account deficit to widen further.

marxj@businesslive.co.za