The South African Reserve Bank (SARB) announced on Thursday that the country’s current account deficit has widened significantly in the second quarter of 2025, reaching 1.1% of Gross Domestic Product (GDP), marking an increase from a revised 0.6% deficit in the first quarter, reflecting a notable deterioration in the country’s external balance.
According to data released by the central bank, the deficit, in rand terms, increased to R82.8 billion ( $4.48 billion) from R47.8 billion ( $2.58 billion) in the preceding quarter.
The primary driver of this widening deficit was a narrowing of the trade surplus. The SARB’s statement indicated that the trade surplus contracted to R177.1 billion ($9.57 billion) from R211 billion ( $11.41 billion) in the first three months of the year, as the value of goods exports decreased more than that of imports.
“The value of exports of goods and services in the second quarter of 2025 decreased by R23.3 billion reflecting lower volumes while the total value of imports, including services, increased by R8.2 billion due to higher prices.” SARB noted
The decline in export earnings was a key factor in the shrinking trade surplus. Data from the SARB indicates that the value of goods exports contracted by 3.2% quarter-on-quarter. The main culprits for this decline were a decrease in exports of base metals, such as iron and steel, and vehicles.
While the country’s mining sector saw a strong performance with increased production of platinum group metals (PGMs) and gold, a slowdown in global demand for other key commodities weighed on overall export value.
“South Africa’s terms of trade (including gold) deteriorated in the second quarter of 2025 as the rand price of imported goods and services increased more than that of exports.” SARB in its statement.
On the import side, while imports also contracted, the decrease was less pronounced, falling by 2.1% quarter-on-quarter. The decline was largely driven by reduced imports of chemical products and machinery and electrical equipment.
South Africa’s top exports continue to be dominated by commodities and natural resources, with items like platinum, coal, iron ore, and gold making up a substantial portion of export revenue.
However, the recent data shows a notable downturn in the export of manufactured goods, particularly vehicles and parts, reflecting sluggish demand from key international markets.
Historically, China has been South Africa’s largest trading partner, both as a destination for its exports and a source of imports. Other major partners for exports include Germany and the United States, while Germany, India, and the United States are also significant sources of imports.
The performance of these key economies and their demand for South African goods—particularly commodities and manufactured products—directly impacts the country’s external balance and its ability to manage the current account.
