October Current Account Surplus for 6 Consecutive Months...Exports Turn to Increase Compared to Same Period Last Year

October Current Account Surplus of $6.8 Billion... Six Consecutive Months
Exports Increase Year-on-Year for the First Time Since August Last Year

Busan Port Sinsundae Pier
[Image source=Yonhap News]

In October, the current account recorded a surplus of 6.8 billion dollars, continuing a six-month streak of surpluses. With improvements in the semiconductor market and other factors, goods exports turned to an increase compared to the same period last year for the first time in 14 months.

According to the preliminary balance of payments statistics released by the Bank of Korea on the 8th, the current account surplus for October this year was recorded at 6.8 billion dollars.

The current account showed a surplus for six consecutive months from May (+1.93 billion dollars), June (+5.87 billion dollars), July (+3.74 billion dollars), August (+4.98 billion dollars), and September (+5.42 billion dollars) through October. The size of the current account surplus expanded for three consecutive months since July.

The cumulative current account surplus from January to October was provisionally estimated at 23.37 billion dollars. Compared to the same period last year (27.38 billion dollars), it decreased by about 4.01 billion dollars.

First, the goods balance in October recorded a surplus of 5.35 billion dollars, marking seven consecutive months of surplus. The surplus margin slightly decreased compared to the previous month (7.42 billion dollars).

However, exports reached 57 billion dollars, increasing by 7.6% compared to the same month last year for the first time in 14 months since August last year. Until now, exports had been declining year-on-year while imports decreased even more, showing a 'recession-type surplus,' but in October, exports increased while imports decreased.

The Bank of Korea explained, "Exports increased centered on passenger cars, petroleum products, and regions such as the United States, Southeast Asia, and Japan, leading to the turnaround."

(Data provided by the Bank of Korea)

Looking at customs-cleared exports in October, passenger cars increased by 21% and petroleum products by 17.7% compared to the same month last year. By region, exports to the United States increased by 17.3%, Southeast Asia by 12.7%, and Japan by 10.3%. In contrast, exports to China decreased by 9.6%, and to the European Union (EU) by 10.7%.

Imports amounted to 51.65 billion dollars, down 4.3% compared to the same month last year. Due to a decline in energy import prices, raw materials decreased by 13.4% year-on-year, while capital goods (-6.3%) and consumer goods (-4.1%) also declined.

The services balance recorded a deficit of 1.25 billion dollars, centered on travel and processing services. The deficit narrowed compared to the previous month (-3.19 billion dollars).

This was influenced by an increase in travelers visiting Korea from Southeast Asia and Japan, reducing the travel deficit to 640 million dollars from -970 million dollars in the previous month. The intellectual property rights balance also recorded a deficit of 340 million dollars, with the deficit narrowing.

The primary income balance showed a surplus of 2.77 billion dollars, mainly from direct investment and securities investment dividend income. Among the primary income balance, dividend income increased from 1.11 billion dollars to 1.87 billion dollars in one month due to increased dividend income from overseas subsidiaries of domestic companies.

The secondary income balance recorded a deficit of 70 million dollars.

The net financial account (assets minus liabilities) increased by 8.37 billion dollars in October.

In direct investment, domestic investors' overseas investment increased by 1.69 billion dollars, while foreign investors' domestic investment increased by 2 billion dollars due to acquisitions of domestic companies by global firms, resulting in a net decrease of 310 million dollars.

In securities investment, domestic investors' overseas investment increased by 2.83 billion dollars, while foreign investors' domestic investment decreased by 1.58 billion dollars due to a contraction in global investment sentiment, resulting in a net increase of 4.4 billion dollars.