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Current Account Surplus of Korea Fell 29.8% Year on Year in H1
Due to Service Account Deficit
Current Account Surplus of Korea Fell 29.8% Year on Year in H1
  • By Jung Suk-yee
  • August 4, 2017, 02:30
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South Korea recorded a current account surplus of US$36.27 billion, down 29.8% from a year ago, in the first half of this year.
South Korea recorded a current account surplus of US$36.27 billion, down 29.8% from a year ago, in the first half of this year.

 

The Bank of Korea announced on August 3 that South Korea recorded a current account surplus of US$36.27 billion, down 29.8% from a year ago, in the first half of this year.

During the period, its goods account surplus edged down to US$58.35 billion, the second-highest H1 figure ever. The highest, US$62.49 billion, was reported in the first half of 2016. The exports and imports reached US$281.92 billion and US$223.57 billion, respectively. The former increased 14.3% and the latter increased 21.5% from a year earlier.

In the meantime, its service account deficit reached an all-time high of US$15.74 billion in H1. This can be attributed to transport and travel account deficits. The latter more than doubled year on year to US$7.74 billion, the highest H1 travel account deficit ever recorded and second only to that for the latter half of 2007 at US$8.25 billion.

The number of inbound tourists from China dropped by over 60% year on year as a result of the economic retaliation that has followed THAAD deployment in South Korea. Under the circumstances, South Korea’s tourism income dropped from US$8.84 billion to US$6.58 billion between H1 last year and H1 this year while the tourism payment increased from US$12.34 billion to US$14.32 billion.

The transport account veered from successive surpluses to a deficit due to the ongoing recession in the shipping industry. In June, the deficit totaled US$470 million, the third-highest ever recorded. The construction account surplus showed a significant drop to US$700 million.

According to the Bank of Korea, the country’s current account surplus for this year as a whole is estimated at US$70 billion. The amount reached US$98.7 billion last year. “If the surplus reaches US$70 billion as estimated, the current account surplus-to-GDP ratio will fall from 7% or so to about 4% between last year and this year,” the central bank explained.

In the meantime, the primary income showed a deficit of US$4.04 billion in H1. It more than quadrupled from a year earlier as dividend payments increased abroad. In H1 this year, securities investment by foreigners rose for the seventh consecutive month and reached US$23.13 billion, the third-highest ever and divided into US$11.17 billion in stock investment and US$11.96 billion in bond investment.

Overseas investment by South Koreans increased 40% to an all-time quarterly high of US$42.37 billion. The amount, which increased for the 22nd consecutive month, is divided into US$17.19 billion in stock investment and US$25.18 billion in bond investment.

Meanwhile, financial derivatives showed a decline of US$5.17 billion. The other types of investment increased US$7.39 billion as assets and liabilities increased US$7.86 billion and US$470 million, respectively. Reserve assets increased US$950 million.