Bank of Korea to Announce 'Preliminary Balance of Payments Statistics' on 7th
Temporary Deficit Expected Due to Increased Dividend Payments in April
[Asia Economy Reporter Jang Sehee] In March of this year, the current account balance recorded a surplus, continuing an 11-month streak of surplus trends. This was largely due to increased exports of automobiles and semiconductors. However, it is expected that a temporary slight deficit will occur in April due to an increase in dividend payments.
According to the 'Preliminary Balance of Payments Statistics' released by the Bank of Korea on the 7th, the current account balance in March this year recorded a surplus of $7.82 billion (approximately 8.7897 trillion KRW). This represents an expansion of the surplus by $1.88 billion compared to the same month last year, marking the 10th consecutive month of increasing surplus.
Accordingly, the cumulative current account surplus for the first quarter (January to March) of this year was $22.82 billion, an increase of $9.89 billion compared to the first quarter of last year.
Regarding this, Park Yang-su, Director of the Economic Statistics Bureau at the Bank of Korea, stated, "The increase in exports of key items such as semiconductors, chemical products, and passenger cars, along with strong performance by domestic shipping companies, contributed to the larger current account surplus in the first quarter compared to last year."
The goods account surplus reached $7.92 billion, up $960 million from the same month last year, supported by strong exports of chemical products (37.2%), petroleum products (17.4%), passenger cars (14.7%), and semiconductors (8.3%). Exports increased by 18.5% to $54.38 billion, while imports rose by 19.3% to $46.46 billion.
The services account deficit narrowed by $740 million to $900 million due to improvements in the transportation account. This was influenced by increased transportation income, mainly from maritime cargo. The Shipping Container Freight Index (SCFI) in March surged by 194.4% compared to the same month last year.
The primary income account recorded a surplus of $1.28 billion, expanding due to increased dividend income. The net financial account assets (assets minus liabilities) increased by $10.01 billion in March. In direct investment, domestic investors' overseas investments rose by $4.22 billion, and foreign investors' domestic investments increased by $1.97 billion. In securities investment, domestic investors' overseas investments increased by $6.43 billion, and foreign investors' domestic securities investments rose by $7.27 billion.
The Bank of Korea expects the current account to record a temporary deficit in April. Director Park said, "Every April, dividend payments are made to foreign investors, which significantly reduce the current account surplus or cause a slight deficit. This year, it is understood that special dividends related to shareholder return policies have been added, so although slight, the possibility of a deficit cannot be ruled out."
Regarding the annual outlook for this year, he explained, "We expect import demand to increase due to rising raw material prices and domestic demand recovery. The import growth rate is gradually outpacing export growth, so considering this, the current account surplus in the second half of the year may decrease."
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