January Current Account Deficit of $4.5 Billion... 'Record High' (Update)

In January of this year, the current account balance turned to a deficit again after one month due to sluggish exports of semiconductors and other products amid the global economic slowdown. The deficit reached the largest scale since the Bank of Korea began compiling statistics in 1980.

According to the preliminary balance of payments data for January released by the Bank of Korea on the 10th, the domestic current account recorded a deficit of $4.52 billion. This is a decrease of $6.76 billion compared to a surplus of $2.24 billion in the same month last year.

The goods balance shifted from a surplus of $1.54 billion in the same month last year to a deficit of $7.46 billion.

The current account had turned to a deficit in August last year (-$2.9121 billion), then recorded a surplus of $2.089 billion in September. It maintained a surplus for two consecutive months in October ($1.6297 billion), avoiding a deficit, but returned to a deficit in November (-$222.8 million), barely switched back to a surplus in December, and then fell into a deficit again in January this year.

By detailed items, the goods balance showed a deficit for four consecutive months, marking the first time since January 1996 when it recorded a deficit for 16 consecutive months.

Exports amounted to $48 billion, down by $8.38 billion (14.9%) compared to the same month last year. Exports declined for five consecutive months due to the global economic slowdown, with decreases in semiconductors, steel products, and others. In particular, semiconductors (customs basis -43.4%), steel products (-24.0%), and chemical products (-18.6%) showed sluggish performance. By region, exports to China (-31.4%), Southeast Asia (-27.9%), and Japan (-12.7%) contracted.

Imports totaled $55.46 billion, increasing by $620 million (1.1%) compared to the same month last year. Imports of raw materials and capital goods decreased, while consumer goods imports increased. Imports of raw materials and capital goods fell by 5.3% and 1.5% respectively compared to the same month last year, whereas consumer goods imports rose by 3.9%.

The services balance recorded a deficit of $3.27 billion as the surplus in transportation services shrank. The deficit in the services balance widened by $2.44 billion compared to the same month last year. The transportation services recorded a surplus of $120 million, but the surplus amount decreased by $1.77 billion compared to one year ago.

The primary income balance posted a surplus of $6.38 billion, increasing the surplus by $4.51 billion compared to the same month last year. Among the primary income balance, the dividend income surplus ($5.66 billion) increased by $4.55 billion in one year, as overseas subsidiaries of domestic companies remitted large dividends to their headquarters.

The net financial account, which is assets minus liabilities, decreased by $64 million. In direct investment, domestic investors' overseas investment increased by $1.77 billion, and foreign investors' domestic investment increased by $1.17 billion. Domestic investors' overseas securities investment rose by $3.69 billion, marking an increase for three consecutive months following November last year.

[Image source=Yonhap News]