Money in the Bank
Korea has been in the black for 25 months in a row now, posting a March current account balance surplus of US$7.35 billion.
According to the Bank of Korea’s March Balance of Payments, tentative figures published on April 29, the 2014 March current account balance stood at US$7.35 billion, showing the quarterly surplus of US$15.1 billion in the first quarter.
Of the March current account balance, goods balance surplus jumped from the previous month’s US$5.4 billion to US$8.04 billion.
Last month, imports and exports rose 5.9 percent and 3.3 percent year-on-year, respectively, attributing to a goods balance surplus surge.
Bustling exports in IT devices, cars, and semiconductors was a boon to goods surplus expansion.
This year’s first quarter goods balance surplus also rose to US$17.8 billion, up US$5.7 billion year-on-year.
The service balance deficit, despite exacerbating “other business service” balances such as R&D and consulting, shrank from the previous month’s US$1.06 billion to US$0.65 billion on the back of improved balances in transportation and travel.
The “other business service” balance deficit grew from the previous month’s US$460 million to US$700 million. Contrary to that, the travel balance red figures were ameliorated from the previous month’s US$480 million to US$260 million, while the transportation balance surplus climbed from the previous month’s US$340 million to US$590 million.
The current account surplus trend is likely to march into the next month.
The central bank’s finance and statistics director Jung Joon said, “Up to now, the data shows the source income balance seems to have shrunk a little, but goods balance surplus will continue on the back of booming exports in automobiles and such. All in all, the surplus trend may last, but if the source income balance surplus shrinks or turns into a deficit, the surplus size may shrink a little.”
The source income payment balance, based on salaries, wages, dividends, and interest income, tends to turn into a deficit in April each year when corporate dividends get distributed. The March source income balance showed a surplus of US$320 million, a similar level to the previous month.
March financial balance outflow excesses dwindled from the previous month’s US$6.92 billion to US$5.78 billion, while this year’s first quarter overall outflow excess was recorded at US$17.2 billion.
Direct investment balance fell by a small margin, due to the conversion of foreign direct investment inflow, while the security investment balance sank significantly due to foreign bond investment net-inflow conversion.