Decreasing Trade Surplus
The Bank of Korea announced on October 4 that South Korea recorded a current account surplus of US$5.51 billion in August this year, posting a surplus for the 54th consecutive month.
The central bank added that the size of the surplus decreased from US$12.06 billion to US$8.67 billion between June and July and then to US$5.51 billion in the following month while the country’s goods account surplus dropped from US$10.78 billion to US$7.3 billion between July and August to hit an 18-month low. Its total imports increased by 0.6% from a year ago to US$34.4 billion last month, showing a positive growth for the first time in 23 months.
The increase in import is worthy of notice in that South Korea’s recent current account surplus can be attributed to a drop in import much more rapid than a drop in export. “General and precision machinery and chemical product imports led the increase as the effect of dropping oil prices was waning,” the central bank explained, “In addition, capital expenditures regarding semiconductor manufacturing equipment and the like increased, leading to some qualitative improvement.” By item, the raw material imports including crude oil and gas imports fell 5.2% whereas the imports of capital goods and consumer goods went up by 5.9% and 7.8%, respectively.
The country’s monthly exports fell 3% from a year earlier to US$41.7 billion. Those of petroleum-based products decreased by 26.4% to US$2.05 billion, display panels by 20.7% to US$1.37 billion and automobiles by 14.6% to US$2.09 billion. Its service account deficit edged down to US$1.45 billion between July and August and the travel account deficit totaled US$1.28 billion.
The primary income surplus soared from US$50 million to US$610 million between July and last month, when the secondary income deficit reached US$940 million and the net asset increased by US$7.7 billion in the financial accounts.
Overseas direct investment by South Korean nationals went up by US$2.16 billion while foreign direct investment in South Korea increased US$1.66 billion. “The former is continuing to increase as insurers’ long-term global bond holdings are on the rise,” the Bank of Korea remarked.