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Monday, October 2, 2023

Korea shifts to current account deficit in April

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Containers stacked up at a port in Incheon on Friday. Korea reported $790 million in current account deficit in April. [NEWS1]
Containers stacked up at a port in Incheon on Friday. Korea reported $790 million in current account deficit in April. [NEWS1]

Korea returned to a current account deficit in April, dragged down by a jump in overseas travel and foreign dividends. However, the goods balance logged its first surplus in seven months.

Korea reported $790 million in current account deficit last month, according to Friday’s preliminary data from the Bank of Korea (BOK).

The figure puts Korea’s total current account deficit at $5.37 billion from January through April of this year, compared to a $15.01 billion surplus during the same period last year.

“Although it was a deficit, it was well defended if we look at the details,” said Lee Dong-won, director at Bank of Korea’s monetary & financial statistics division, during a press conference held in central Seoul Friday.

The goods balance account posted a $580 million surplus.

Exports in April totaled $49.11 billion, down 17 percent year on year. But imports also fell in the same period by 13 percent to $48.53 billion.

Exports of ships jumped 63 percent year on year while those of vehicles jumped 41 percent. Exports of home appliances fell 42 percent and those of semiconductors were down 40.5 percent during the same period.

Exports to Southeast Asia nosedived 29.1 percent, followed by China that fell 26.5 percent and Japan at minus 21.1 percent. Meanwhile, exports to the Middle East jumped 31.3 percent in the same period, and those to the EU were up 9.9 percent.

Energy imports, including crude oil, coal and gas, nosedived 28 percent in April from a year earlier, followed by raw materials imports that fell 20.5 percent.

The services account registered $1.21 billion in deficit, led by a plunge in the travel account.

Manufacturing services led the deficit with a -$540 million figure, followed by travel account that logged $500 million in deficit.

The primary income account logged a $90 million deficit thanks to a drop in the income on equity.

Primary income usually logs a deficit in April due to dividend payout to foreign investors, but the April figure of $90 million was smaller than the average $3.69 billion.

“The current account is projected to continuously improve in May, considering a decline in the trade deficit in May from April by customs estimates. And primary income usually records a surplus [in May] as the dividend payout to foreigners shrinks,” said Lee.

He added the goods account will continue to improve through the second half of the year, contributing to a current account surplus.

Korea’s net assets decreased by $4.82 billion in April.

Direct investment assets rose by $980 million, while direct investment liabilities shrunk by $740 million. Portfolio investment assets saw a $1.75 billion increase, while liabilities jumped by $5.38 billion.

Financial derivatives posted a net increase of $390 million.

BY MIN-JI JIN [jin.minji@joongang.co.kr]