The Bank of Korea announced on April 1 that South Korea is estimated to have recorded a current account surplus of US$7.51 billion in February this year to remain in the black for 48 months in a row.
The estimated amount increased by US$690 million from a month ago and by US$1.43 billion from a year earlier. The central bank explained that the estimated amount increased as international trade conditions improved based on the low international oil prices.
Still, some experts point out that the increase in the estimated current account surplus was because its goods imports declined faster than its goods exports amid the current economic recession. In February this year, South Korea’s total goods exports fell 9.3% year on year to US$36.55 billion while its goods imports showed a decrease of 13.9% to total US$28.65 billion. The goods account surplus was maintained at US$7.9 billion for the second consecutive month.
In the meantime, the service account deficit decreased from US$1.93 billion to US$1.27 billion between January and February as the business service and travel account balances improved in spite of a deficit of US$580 million in intellectual property rights (IPR) fees. The travel account deficit decreased from US$890 million to US$500 million and the deficit regarding the business service accounts more than halved from US$1.04 billion to US$510 million. The construction sector posted a trade surplus of US$700 million whereas transport recorded a deficit of US$40 million.
The primary income account surplus fell to US$850 million due mainly to a decrease in dividend income while the secondary income account showed a surplus of US$20 million. The financial account showed a net asset increase of US$9.5 billion.
When it comes to direct investment, South Koreans’ overseas investment increased US$1.51 billion whereas foreigners’ investment in South Korea fell US$40 million. The net asset regarding securities investment rose by US$6.2 billion with South Koreans’ and foreigners’ securities investments increased US$2.94 billion and decreased US$3.26 billion, respectively. The latter continued to decline for the ninth consecutive month but the decrement showed a significant decline compared to US$4.53 billion of the preceding month.
The financial derivatives account recorded a net outflow of US$760 million in February. The reserve asset, which is obtained by subtracting non-transactional factors from the foreign exchange reserves, fell by US$1.57 billion.