Koreas Current Account Surplus Continues for 30 Months Amid Rising Overseas Investments
South Korea has recorded a current account surplus for 30 consecutive months, yet investments by individuals, corporations, and the national pension fund abroad have surged even more significantly. This trend has led to concerns that the outflow of investment funds is now exceeding the inflow of dollars, resulting in a more entrenched high exchange rate. In particular, the current account surplus halved in October due to the effects of the Chuseok holiday, intensifying pressures on the exchange rate.
According to preliminary statistics released by the Bank of Korea on the 5th, the current account surplus for October stood at $6.81 billion (approximately 10.4 trillion won), down to half the $13.47 billion surplus recorded in September. Compared to October of last year, which saw a surplus of $9.4 billion, this figure represents a decline of 27.5%. Nonetheless, the trend of maintaining a surplus for 30 consecutive months continues.
The goods balance surplus decreased significantly to $7.82 billion in October, down from $14.24 billion the previous month. This is also a drop of $250 million compared to $8.07 billion in October of last year, attributed to the reduction in working days during the Chuseok holiday.
Exports totalled $55.88 billion, marking a 4.7% decrease compared to the same month last year. While information technology (IT) items, particularly semiconductors, continued to show growth at 25.2%, exports in non-IT sectors such as steel products (-14.1%), chemical products (-13.1%), and passenger cars (-12.6%) saw declines. Imports also fell by 5.0% during the same period, amounting to $48.06 billion.
The service balance recorded a deficit of $3.75 billion, which is larger than the deficit of $3.32 billion recorded the previous month. This increase in the deficit can be attributed to a higher travel deficit of $1.36 billion during the long holiday, compared to $910 million in September. Meanwhile, the primary income balance, which includes dividend and interest income, maintained a surplus of $2.94 billion, similar to the $2.96 billion recorded in September.
As South Korea navigates these economic challenges, the continuing current account surplus juxtaposed with rising overseas investments raises questions about the future stability of the exchange rate and the overall economic landscape.
According to preliminary statistics released by the Bank of Korea on the 5th, the current account surplus for October stood at $6.81 billion (approximately 10.4 trillion won), down to half the $13.47 billion surplus recorded in September. Compared to October of last year, which saw a surplus of $9.4 billion, this figure represents a decline of 27.5%. Nonetheless, the trend of maintaining a surplus for 30 consecutive months continues.
The goods balance surplus decreased significantly to $7.82 billion in October, down from $14.24 billion the previous month. This is also a drop of $250 million compared to $8.07 billion in October of last year, attributed to the reduction in working days during the Chuseok holiday.
Exports totalled $55.88 billion, marking a 4.7% decrease compared to the same month last year. While information technology (IT) items, particularly semiconductors, continued to show growth at 25.2%, exports in non-IT sectors such as steel products (-14.1%), chemical products (-13.1%), and passenger cars (-12.6%) saw declines. Imports also fell by 5.0% during the same period, amounting to $48.06 billion.
The service balance recorded a deficit of $3.75 billion, which is larger than the deficit of $3.32 billion recorded the previous month. This increase in the deficit can be attributed to a higher travel deficit of $1.36 billion during the long holiday, compared to $910 million in September. Meanwhile, the primary income balance, which includes dividend and interest income, maintained a surplus of $2.94 billion, similar to the $2.96 billion recorded in September.
As South Korea navigates these economic challenges, the continuing current account surplus juxtaposed with rising overseas investments raises questions about the future stability of the exchange rate and the overall economic landscape.
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