May Current Account Turns Surplus... Surplus Halved Compared to Last Year (Update)

[Asia Economy Reporter Eunbyeol Kim] The current account, which recorded a deficit in April due to the impact of the novel coronavirus disease (COVID-19), turned to a surplus again in May.

According to the 'May 2020 Balance of Payments (Provisional)' announced by the Bank of Korea on the 7th, the current account recorded a surplus of $2.29 billion, turning positive. However, the surplus amount was only half of that in May last year ($5.18 billion).

The goods balance, which is the difference between exports and imports of goods, showed a surplus of $2.5 billion, increasing from the April surplus of $630 million. Compared to May last year, the surplus decreased by $3 billion.

A Bank of Korea official explained, "In April, the global lockdown was at its most severe, but in May, the lockdowns were gradually lifted. Thanks to this, the goods balance improved compared to April, but it still decreased significantly compared to last year."

Exports amounted to $34.55 billion, down 28.2% year-on-year, and imports ($32.05 billion surplus) also decreased by 24.8%. Both exports and imports have continued to decline for three consecutive months compared to the same month last year.

The deficit in the services balance decreased from $950 million in May last year to $480 million in May this year, due to improvements in travel and transportation balances. The primary income balance recorded a surplus of $540 million, down from $1.29 billion in the same month last year due to a decrease in dividend income.

The financial account net assets (assets minus liabilities), which indicate capital inflows and outflows, increased by $3.24 billion in May.

In direct investment, domestic investors' overseas investment decreased by $70 million, and foreign investors' domestic investment decreased by $110 million. In securities investment, domestic investors' overseas investment increased by $4.1 billion, but foreign investors' domestic investment decreased by $380 million.