A weakening of South Africa’s terms of trade results in a significant deterioration of the current account in the first quarter of 2018

SOUTH AFRICA - Report 21 Jun 2018 by Iraj Abedian

There was a marked widening of the deficit in the current account of the balance of payments, from 2.9% of GDP in the fourth quarter of 2017 to 4.8% of GDP in the first quarter of 2018. This was largely due to the deterioration of the trade account during the period; South Africa’s trade balance went from a sizeable surplus of R74 billion to a significant deficit of R25 billion. Even though the shortfall on the services, income and current transfer account narrowed during the first quarter of 2018 to R204 billion from R211 billion, this was significantly less than the widening in the trade account. As such, the balance on the current account deteriorated from R137 billion to R229 billion in the first quarter of 2018.

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