Bank of Korea: This Year's Current Account Surplus to Exceed May Forecast of $82 Billion

Bank of Korea's "July Economic Assessment"
Increase in Number of Employed Persons Expected to Surpass Previous Forecast (120,000)

On July 10, the Bank of Korea stated in its "July Economic Assessment" that this year's current account surplus is expected to exceed the 8.2 trillion won forecast made in May. The increase in the number of employed persons is also projected to surpass the previous estimate of 120,000.

The Bank of Korea expects the current account surplus to exceed the earlier forecast because the results in the first half of the year outperformed expectations. The Bank of Korea explained, "Semiconductor exports performed better than anticipated due to robust investments in artificial intelligence (AI) and pre-emptive demand in preparation for potential item-specific tariffs. As a result, the current account surplus in the second quarter significantly exceeded our previous projection." However, the Bank of Korea also forecasted that the current account surplus would decrease in the second half of the year compared to the first half, as the impact of U.S. tariff policies begins to take effect in earnest.

The increase in the number of employed persons has also grown, mainly in public administration and health and welfare sectors, with 245,000 jobs added in May. In particular, the rise in public sector jobs is leading this trend. However, excluding these, private sector jobs such as in construction and manufacturing continued to decline. The Bank of Korea expects that in the second half of the year, employment in construction and manufacturing will remain sluggish due to the downturn in the construction industry and the impact of U.S. tariff policies. However, in the service sector, the increase in public sector jobs, the supplementary budget, and improved consumer sentiment are expected to drive job growth beyond previous forecasts.

The Bank of Korea assessed that the growth trend in the second quarter was generally in line with earlier expectations. Although construction investment remained sluggish, consumption rebounded as economic sentiment improved rapidly after May, and exports increased, especially in semiconductors.

From the third quarter onward, domestic demand is expected to continue its recovery, supported by the supplementary budget and interest rate cuts. However, exports are projected to slow as the impact of U.S. tariffs becomes more pronounced. Bank of Korea Governor Rhee Changyong stated at a press conference following the monetary policy meeting, "The future trend of exports will be greatly influenced by the outcome of trade negotiations."

Consumer prices are expected to continue rising at around 2%, due to stable international oil prices and government price stabilization measures. The Bank of Korea stated, "The future trend of consumer prices is expected to remain stable, with the core inflation indicators showing stability and quarterly growth rates staying slightly below the 2% target level for the time being."