Bad news for the rand

South Africa’s current-account deficit was slimmer than expected in the third quarter after its trade surplus narrowed only slightly and the shortfall on the services, income and current transfer account was the smallest it’s been in a year. 

The gap in the current account — the broadest measure of trade in goods and services — shrank to an annualized 1% of gross domestic product, or R70.8 billion, from a revised 1% of GDP, or R75.3 billion in the prior quarter, the South African Reserve Bank said in a statement on Thursday.

The median estimate of three economists in a Bloomberg survey was for a deficit of 1.7% of GDP. South Africa has now posted a current account shortfall for the 10th straight quarter.

“We now forecast a modest narrowing of the current account deficit from 1.6% of GDP in 2023 to 1.3% of GDP in 2024, given the weaker performance of the economy,” Goldman Sachs economist Andrew Matheny wrote in a note to clients.

“We maintain our forecast for a widening of the current account deficit to around 2% of GDP in 2025 as growth picks up.”

The annualized trade surplus narrowed to R177 billion from R179.5 billion in the second quarter, driven by a drop in the value of goods exports, which declined more than merchandise imports, the central bank said.

“The decrease in the value of exports and imports of goods and services in the third quarter of 2024 reflected both lower volumes and prices,” the Reserve Bank said.

The drop in the value of exports was driven by net gold shipments, which fell to R139 billion from R151 billion, the central bank data showed.

The rand traded 0.65% weaker at 18.05 against the dollar by 1:01 p.m. in Johannesburg.

The currency, a bellwether for emerging markets, has been under pressure since Donald Trump won the November 5 US elections as investors bet his pledge to raise tariffs and cut taxes would prompt the Federal Reserve to lower rates less than it had forecast, boosting the US currency.