October Current Account Surplus of $880 Million...Goods Balance Turns Deficit (Update)

Surplus Shrinks by $7.13 Billion Due to Weak Exports to China

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] The current account balance in October recorded a surplus of $880 million, continuing the surplus from the previous month. However, due to sluggish exports to China, the surplus decreased sharply by $7.13 billion compared to the same month last year, and the goods balance turned to a deficit.

According to the "October Balance of Payments (Provisional)" announced by the Bank of Korea on the 9th, the domestic current account recorded a surplus of $880 million. However, compared to the same month last year, the surplus decreased by as much as $7.13 billion.

The current account maintained a surplus for 23 consecutive months from May 2020 until March this year, then recorded a deficit of $79 million in April, followed by an increased surplus of $3.86 billion in May and $5.61 billion in June. However, the surplus sharply decreased to $790 million in July, turned to a deficit due to an expanded trade deficit of -$3.05 billion in August, and then returned to a surplus in September.

Within the current account, the goods balance recorded a deficit of $1.48 billion, turning to a deficit with a sharp decrease of $7.58 billion compared to the same month last year.

During this period, exports based on customs clearance amounted to $52.59 billion, decreasing by 6% year-on-year, mainly due to declines in semiconductors and chemical products.

Imports ($54.07 billion) increased by 8.5% compared to the same month last year. Imports of raw materials, capital goods, and consumer goods increased by 9.9%, 10.9%, and 7.9%, respectively.

The services balance recorded a surplus of $50 million as the surplus in transportation balance shrank, reducing the surplus by $590 million compared to the same month last year.

The net financial account, which is assets minus liabilities, increased by $2.53 billion. In direct investment, domestic investors' overseas investment increased by $2.75 billion, and foreign investors' domestic investment increased by $810 million. Domestic investors' overseas securities investment decreased by $1.56 billion, while foreign investors' domestic securities investment expanded by $3.55 billion.