Three Consecutive Months of Merchandise Trade Deficit
Annual Surplus of 29.83 Billion USD
[Asia Economy Reporter Seo So-jeong] Due to the global economic slowdown, exports such as semiconductors sharply declined, resulting in a current account surplus of 2.68 billion dollars in December last year. Thanks to increased dividends and a decrease in imports for the first time in two years, the two-month consecutive deficit streak following November last year was avoided. However, the current account is showing an unstable trend as the goods balance decreased by 4.91 billion dollars compared to the same month last year, and the service balance also saw an expanded deficit.
According to the Bank of Korea's announcement on the provisional 'December international balance of payments' last year, the domestic current account recorded a surplus of 2.68 billion dollars (approximately 3.3822 trillion won). This is a decrease of 3.69 billion dollars compared to a surplus of 6.37 billion dollars a year earlier. The goods balance shifted from a surplus of 4.43 billion dollars in the same month last year to a deficit of 480 million dollars.
The current account, after turning to a deficit of -2.9121 billion dollars in August last year, recorded a surplus of 2.089 billion dollars in September. It maintained a surplus for two consecutive months with 1.6297 billion dollars in October, avoiding a deficit, then returned to a deficit (-222.8 million dollars) in November before turning back to a surplus in December.
The cumulative current account from January to December last year recorded a surplus of 29.83 billion dollars, shrinking the surplus by 55.4 billion dollars compared to the same period the previous year.
By detailed items, the goods balance showed a deficit for three consecutive months. Exports amounted to 55.67 billion dollars, down 6.47 billion dollars (10.4%) from the same month last year. Exports declined for four consecutive months, mainly in semiconductors and steel products, due to the global economic slowdown. In particular, semiconductors (customs basis -27.8%), steel products (-20.5%), and chemical industrial products (-17.2%) underperformed. By region, exports to China (-27.1%), Southeast Asia (-23.7%), and Japan (-10.3%) contracted.
Imports (56.15 billion dollars) decreased by 1.56 billion dollars (2.7%) compared to the same month last year. Imports decreased for the first time in two years since December 2020, mainly due to reductions in capital goods and consumer goods.
Raw material imports increased by 0.7% compared to the same month last year, while capital goods and consumer goods imports decreased by 6.4% and 4.9%, respectively. Among raw materials, the import amounts of gas and crude oil (customs basis) increased by 52.2% and 16.9%, respectively. Conversely, imports of petroleum products and chemical products decreased by 25.6% and 7.6%, respectively.
The service balance recorded a deficit of 1.39 billion dollars as the surplus in the transportation balance shrank. The service balance deficit expanded by 630 million dollars compared to the same month last year. The transportation balance recorded a surplus of 170 million dollars, but the surplus decreased by 1.08 billion dollars compared to a year earlier. This was due to the Shanghai Containerized Freight Index (SCFI) dropping by 76.9% compared to the same month last year. With the easing of COVID-19 restrictions, overseas travel surged, expanding the travel balance deficit to 1.14 billion dollars.
The primary income balance recorded a surplus of 4.79 billion dollars, increasing by 1.3 billion dollars compared to December last year (3.49 billion dollars). Among the primary income balance, the dividend income balance surplus (4.49 billion dollars) increased by 1.7 billion dollars in one year, influenced by increased dividend income received by domestic companies from overseas local subsidiaries.
The net financial account assets, calculated by subtracting liabilities from assets, increased by 5.06 billion dollars. In direct investment, domestic investors' overseas investment increased by 5.51 billion dollars, and foreign investors' domestic investment increased by 2.48 billion dollars.
Domestic investors' overseas securities investment increased by 4.37 billion dollars, marking an increase for two consecutive months following November last year.
Foreign investors' domestic securities investment decreased by 3.05 billion dollars, marking a decrease for the first time in six months since June last year.
Last year, the current account recorded a surplus of 29.83 billion dollars, exceeding the Bank of Korea's forecast. In its revised economic outlook in November last year, the Bank of Korea expected the current account surplus to be 25 billion dollars this year.
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