Thursday, February 20, 2020
Korea’s Current Account Surplus Increases in Nine Months
A Recession-type Surplus
Korea’s Current Account Surplus Increases in Nine Months
  • By Jung Suk-yee
  • January 8, 2020, 09:57
Share articles

Korea’s current account surplus increased in November 2019, the first upturn in nine months.

Korea’s current account surplus took an upturn in November 2019, the first on-year increase in nine months, but it looks more like a recession-type surplus.

Current account surplus widened as Korean companies paid less in dividend to overseas investors because of their deteriorating profits, and both exports and imports marked a double-digit fall. As economy lost vitality, the current account surplus rather widened. Goods account surplus narrowed for nine months in a row.


The preliminary balance of payments for November 2019 released by the Bank of Korea (BOK) on Jan. 7 showed the Korea’s current account registered a surplus of US$5.97 billion, up US$840 million from a year earlier. Current account surplus turned upward in nine months after falling for eight months in a row since March 2019.

The year-on-year increase in current account surplus is caused by Korean companies’ reduced dividend payouts to foreign investors due partly to their dwindling profits. The primary income account surplus reached US$970 million, US$630 million up from a US$340 million one year earlier. Investment income dividends, designed to be paid to foreign investors, stood at US$1.01 billion, falling 33.5 percent from a year before. This is the highest drop (minus 57.6 percent) in two years and four months since July 2017.

Goods account surplus decreased by US$110 million from a year earlier. As trade tensions between the United States and China raged on and the semiconductor industry slowed down, the surplus dropped by about US$700 million from a month earlier.

The on-year increase in goods account surplus dwindled to US$7.39 billion in November from US$7.5 billion a year earlier. Exports of goods on a balance of payments basis declined 10.3 percent over the year to US$46.5 billion.

Meanwhile, imports diminished 11.7 percent to US$39.11 billion. As was often shown in a recession, goods account surplus was caused by falling exports and a bigger fall in imports.

In terms of cumulative exports, goods account surplus from January to November of 2019 amounted to US$71.83 billion, down more than US$30 billion from the same period a year earlier (US$ 103.46 billion). As the preliminary figures for the first 11 months of 2019 show year-on-year decline, the current account outlook for 2019 is expected to be bleak, which, in turn, makes the outlook for the first half of 2020 gloomier.