South Africa Current Account Deficit Widens to 1.1% of GDP in Q2

South Africa's current account deficit widened significantly in the second quarter of 2025 to 82.8 billion rand (1.1% of GDP), nearly doubling from the previous quarter's revised deficit of 47.8 billion rand (0.6% of GDP). This deterioration was driven by a decrease in export volumes and values, which reduced the trade surplus from 211 billion rand to 177.1 billion rand, while import costs rose due to higher prices. The deficit expansion also reflected larger income outflows, including increased dividend and interest payments to foreign investors, exacerbating the country's external imbalances. The Reserve Bank highlighted that structural challenges within South Africa, such as export competitiveness and domestic bottlenecks, continue to undermine trade gains despite some improvements in logistics and infrastructure. Furthermore, U.S. President Donald Trump's imposition of a 30% tariff on most South African exports to the U.S. has intensified trade tensions, adversely affecting South Africa's trade performance. Policymakers are monitoring the situation closely, emphasizing the need for stronger trade conditions and stable capital inflows to prevent further deterioration amid modest economic growth and fiscal pressures.