Korea maintains current account surplus for 56 straight months

By Park Hyong-ki

Korea maintained its current account surplus for 56 consecutive months in October, despite a fall in trade and widened service deficit, according to the Bank of Korea (BOK) Thursday.

However, trade data in November showed a rebound in both exports and imports.

The current account, the broadest measure of trade, stood at $8.72 billion in October, down from $9.58 billion a year ago.

The country was able to achieve the longest-running surplus since 2012 as Asia’s fourth-largest economy saw its exports outweigh imports, even though both fell in October.

Korea’s exports reached $43.3 billion in October, down 6.3 percent from a year ago, while imports fell 5 percent to $33.5 billion, narrowing the goods account surplus to $9.83 billion from $10.97 billion in the same period.

“The production suspension of Samsung Galaxy Note 7 smartphones and prolonged management-labor disputes in the automobile sector negatively affected exports (in October),” a BOK official said.

The BOK last October cut its growth forecast for 2017 to 2.8 percent from 2.9 percent after partially reflecting those negative factors such as the fallout of the Note 7 and the dispute at Hyundai Motor.

The services account deficit widened to $1.59 billion from $1.49 billion, although it saw an improvement in the balance of payment for travel and intellectual property (IP) accounts.

The travel account deficit decreased from $900 million to $500 million, while the IP deficit fell from $700 million to about $510 million on-year.

The increased services account deficit, overall, was due to a fall in the construction services account, which fell to $570 million from $770 million on-year as the government tightened its regulations against housing speculations and loans.

In separate data by the Ministry of Trade, Industry and Energy Thursday, both exports and imports improved in November, despite low consumer and business sentiment amid a political scandal involving President Park Geun-hye and her close associates, including Choi Soon-sil.

Exports increased $1.3 billion to $45.5 billion last month, compared to a year ago, thanks to brisk overseas sales of semiconductors, one of 13 major export goods, the trade data showed.

Korea’s semiconductor exports increased 11.6 percent, reaching $5.79 billion on-year, the fifth biggest to date in outbound shipments of chips on increased demand for computers and mobile devices.

Brisk overseas sales of chips were able to offset a fall in exports in October stemming from the production suspension of Samsung Electronics’ Galaxy Note 7 smartphones.

With imports reaching $37.5 billion, Korea’s trade balance stood at $8 billion.