Due to Sluggish Exports
The Bank of Korea announced on Feb. 6 that South Korea’s current account surplus totaled US$59.97 billion last year, down US$17.5 billion from a year earlier and the lowest since 2012.
The central bank explained that the surplus exceeded its estimate for last year, US$57 billion, and the decline in surplus is unlikely to have a significant impact on South Korea’s external economic stability and foreign exchange rates. In December last year, the surplus added up to US$4.33 billion and the country remained in the black for the eighth consecutive month.
Last year, South Korea’s exports were heavily affected by U.S.-China trade disputes and a recession in the global semiconductor industry. As a result, South Korea’s goods exports fell 10.3 percent to US$561.96 billion last year. Likewise, its goods imports fell 6 percent to US$485.1 billion, led by a decline in oil price and a decrease in semiconductor equipment imports. South Korea’s goods account surplus fell US$33.23 billion to US$76.86 billion in 2019.
On the other hand, its service account deficit decreased by US$9.05 billion to US$23.02 billion based on an increase in tourism income. Its travel account deficit fell from US$16.57 billion to US$10.67 billion to lead to the service account improvement. The tourism income hit an all-time high of US$21.63 billion based on a significant increase in the number of inbound Chinese and Japanese tourists whereas South Korea’s tourism expenditures fell US$2.83 billion to US$32.3 billion.
In 2019, South Korea’s primary income surplus reached a record high of US$12.2 billion. South Korean companies’ dividends from overseas corporations increased, their dividend income reached an all-time high of US$22.68 billion, and the primary income account improved from US$3.32 billion in deficit to US$3.31 billion in surplus. In addition, the overseas interest income increased to US$18.24 billion to result in an increase in interest income surplus from US$9.39 billion to US$9.52 billion.
The net financial account, which shows capital inflow and outflow, increased US$60.95 billion. When it comes to direct investment, locals’ overseas investment and foreigners’ investment in South Korea increased US$35.53 billion and US$10.57 billion, respectively. As for securities investment, the respective investments increased US$58.58 billion and US$18.46 billion.