$8.92 Billion Current Account Surplus in May... Largest in 2 Years and 8 Months
Semiconductor Exports Drive Surplus
With continued strong semiconductor exports, the current account balance in May recorded the largest surplus in 2 years and 8 months.
According to the 'May Balance of Payments (provisional)' released by the Bank of Korea on the 5th, the current account balance for last May was recorded at a surplus of 8.92 billion dollars. This is the largest surplus in 2 years and 8 months since September 2021 (9.51 billion dollars).
The current account balance had recorded a surplus for 11 consecutive months since May last year, but turned to a deficit in April this year due to large-scale dividend payments to foreigners, before returning to a surplus after one month.
The current account surplus was driven by exports such as semiconductors. Exports in May (58.95 billion dollars) increased for the eighth consecutive month due to growth in semiconductors, information and communication devices, petroleum products, and passenger cars. Based on customs clearance, semiconductors increased by 53% compared to the same month last year, information and communication devices by 18%, petroleum products by 8.2%, passenger cars by 5.3%, and machinery and precision instruments by 5.3%. On the other hand, chemical products (-1.9%) and steel products (-10.9%) decreased.
By region, exports increased compared to the same month last year to Southeast Asia (30.4%), the United States (15.6%), China (7.6%), and Japan (2.4%), but decreased to the European Union (EU, -2.2%).
Imports amounted to 50.2 billion dollars, down 1.9% compared to the same month last year. Imports turned to a decrease in raw materials, capital goods, and consumer goods. Based on customs clearance, raw materials such as petroleum products and gas decreased by 1% compared to the same month last year, capital goods such as semiconductors and information and communication devices decreased by 3.3%, and consumer goods such as home appliances and direct consumer goods decreased by 2.1%.
The goods balance, which represents the difference between exports and imports, recorded a surplus of 8.75 billion dollars, marking 14 consecutive months of surplus.
The services balance recorded a deficit of 1.29 billion dollars, mainly due to travel and processing services. Construction (290 million dollars) continued to show a surplus, but travel (-860 million dollars) and processing services (-550 million dollars) continued to run deficits.
The primary income balance turned to a surplus of 1.76 billion dollars, centered on dividend income. This was due to the resolution of the impact of large-scale dividend payments to foreigners in the previous month. Salaries and wages decreased by 190 million dollars, while investment income increased by 1.95 billion dollars.
The financial account net assets, which indicate capital inflows and outflows, increased by 7.58 billion dollars in May, turning to an increase after one month. Direct investment increased by 5.53 billion dollars. Overseas investment by domestic investors increased by 6.33 billion dollars, the largest increase in 25 months since April 2022. Foreign investment in the domestic market increased by 790 million dollars.
Securities investment in May increased by 4.78 billion dollars. Overseas investment by domestic investors increased by 7.1 billion dollars, mainly in stocks, while foreign investment in the domestic market increased by 2.32 billion dollars, mainly in bonds. Reserve assets decreased by 2.2 billion dollars.
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