By Yoon Ja-young
Staff Reporter
Korea is on course to record $20.7 billion in current account surplus this year, and the $20-billion level could be maintained every year until 2014, the International Monetary Fund (IMF) has estimated.
The IMF said the country would rebound earlier and stronger than others thanks to a weak domestic currency.
It believes Korea could record a $20.7-billion current account surplus this year, the eighth biggest among the 33 developed countries. It estimated surpluses of $22.1 billion in 2010, $24.1 billion in 2011, $25.9 billion in 2012, $25 billion in 2013 and $28 billion in 2014.
``Like Japan, the newly industrialized economies (NIEs) are expected to experience a long and severe recession, owing to their high exposure to the global advanced-manufacturing cycle and their extensive global financial links,'' it said.
``Among these economies, Korea is expected to rebound earlier and more strongly, as exports will benefit from the sharply depreciated exchange rate and domestic demand will be supported by a forceful policy stimulus,'' it added.
NIEs refer to Hong Kong, Korea, Singapore and Taiwan.
The IMF estimates are much bigger than the government forecasts of $16-billion surplus this year and $10 billion next year.
The fund estimates that Japan will achieve the biggest surplus of $76.3 billion, followed by Germany's $71.6 billion. Norway, Switzerland and Taiwan are expected to post over $30 billion in surplus each, and Sweden and Singapore over $ 20 billion.
The United States, meanwhile, will mark a deficit of $393.2 billion, smaller than the last year's $673.2-billion deficit.
A current account surplus is not healthy ― it is due to the plunging value of a domestic currency, which contracts imports more than exports. Koreans have had to tighten their belts as import prices have soared, while exporters have enjoyed price competitiveness thanks to a weak won.
However, it is doubtful whether the handsome surplus can continue as the won-dollar rate has been falling recently. The won closed at 1,247 won per dollar last Friday, the highest in seven months. Economists estimate the rate to fall further to below 1,200 won in the latter half of the year.
Moreover, Korean companies haven't gone through corporate restructuring to the same extent as their rivals in other countries because they could live on the weak won. LG Electronics CEO Nam Yong was one who showed concern that the weak won could be a curse instead of a blessing.
The country's service deficit, which contracted to $16.7 billion last year from $19.8 billion the previous year, is likely to expand again as the won begins to pick up in value.