Korea posts 1st current account deficit in 2 years in April

The Korea Times

The Korea Times

Finance

Sat, September 30, 2023 | 14:16

Economy

Korea posts 1st current account deficit in 2 years in April

Posted : 2022-06-10 09:10

Updated : 2022-06-11 16:37

Containers for exports and imports are stacked at a pier in Korea's largest port city of Busan, June 6. Yonha

Account deficit comes amid high commodity costs, dividend payments

Korea posted its first current account deficit in two years in April as soaring energy and commodity prices pushed up import bills, and overseas dividend payments expanded, central bank data showed Friday.

However, the Bank of Korea (BOK) said the April deficit appears to be temporary and the current account will return to a surplus in May, given that seasonal factors such as dividend payments will be removed.

According to the preliminary data from the BOK, the current account shortfall came to $80 million in April, compared with a surplus of $180 million registered a year earlier.

This was the first current account deficit since April 2020, when the country logged a deficit of $4.02 billion. It also turned around from a surplus of $7.06 billion the previous month.

During the January to April period, the cumulative account surplus reached $15.31 billion, down from a surplus of $22.52 billion in the same period a year earlier.

The BOK has predicted that the country will log a $50 billion current account surplus for the year ― $21 billion in the first half and $29 billion in the latter.

The April deficit came as the country's import bills mounted at a faster pace than money earned from exports amid soaring energy and major commodity prices caused by global supply chain disruptions and the ongoing war in Ukraine.

Exports amounted to $58.93 billion in April, up 11.2 percent from a year earlier, while imports expanded 16.5 percent to $55.98 billion over the cited period.

As a result, the goods balance posted a surplus of $2.95 billion for the month, down from the previous year's surplus of $4.95 billion, the data showed.

Also contributing to the deficit were expanded overseas dividend payments, whose balance stood at a shortfall of $3.82 billion in April. Including the dividend payments, the primary income account posted a deficit of $3.25 billion.

The services account, which includes outlays by South Koreans on overseas trips and transport earnings, logged a surplus of $570 million in April thanks in part to high freight rates ― a turnaround from a deficit of $130 million the year before. (Yonhap)

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