SA’s current account deficit widens

South Africa's current account deficit has widened significantly, surging from R165.5 billion to R166 billion, equivalent to 2.3% of GDP. Nthabiseng Molemoeng, Head of the Balance of Payments Unit at the South African Reserve Bank (SARB), shed light on the factors contributing to this increase. The trade surplus narrowed as the country imported more goods than it exported. Crude oil and refined petroleum products were among the major imports, while exports saw a slight increase, particularly in manufacturing products like chemical products, food, and beverages. The reopening of a refinery led to an increase in crude oil imports for power generation and gas turbine use. Looking at the broader picture, the trend of widening trade deficits has been consistent, with a focus on imported machinery equipment, batteries, electric accumulators, and solar panels. Recent upticks in refined petroleum imports indicate a continuation of this trend, illustrating an ongoing economic and production journey reflected in the numbers. The services and income account also showed a widened shortfall, with increased transport services for inbound tourists and high dividend payments across various sectors contributing to the income deficit. Despite favorable iron ore prices driven by global demand, South Africa has missed opportunities to fully benefit from its terms of trade due to factors like logistics issues and exporters opting for alternative ports like Maputo, Mozambique. While the country navigates these challenges, the hope remains for a turnaround in the balance of accounts. It is evident that adjustments are being made, but the road ahead may still be challenging.