Account surplus streak reaches 38

Korea’s current account continued its run of surpluses for the 38th month in a row in April, when the surplus was $8.14 billion.

If May’s results show a surplus, it will be a new record of 39 months in a row, beating the previous 38-month record set between June 1986 and July 1989

The last time the current account balance recorded a deficit was in February 2012.

However, some current account surpluses are healthier than others, and the surpluses have been mainly due to sharper drops in imports than in exports for the past few months. Both imports and exports have been in decline from January through May.

According to the Bank of Korea on Tuesday, exports shrunk 11.2 percent in April compared to the same month a year ago to $50.38 billion while imports saw a steeper decline of 17.9 percent during the same period to $37.82 billion.

As a result, the goods account reported a surplus of $12.56 billion.

The steeper fall in imports was largely caused by low crude prices. Trade figures released Monday for May by the Ministry of Trade, Industry and Energy showed similar declines.

The service account deficit in April was $1.13 billion, up from $970 million in March. This was largely due to a growing deficit in the travel account as more Koreans traveled abroad including to Japan because of its weak currency.

The financial account, which gauges cross-border capital flows, saw a net outflow of $10 billion in April, down from $11 billion in March thanks to the stock purchases by foreign investors. In fact portfolio investment, which includes buying and selling of stocks and bonds, saw a net outflow of $140 million, much less than March’s $12.1 billion outflow.

The central bank is projecting that the current account surplus by the end of this year will reach an all-time record of $96 billion. The previous record was last year’s $89.2 billion. Already in the first four months of this year, the current account surplus has accumulated to $31.59 billion, which is a nearly 30 percent increase from the same period last year of $22.35 billion.

The big concern is the shrinking of exports despite decent economic conditions in Korea’s major markets, including the U.S. and China. In fact Korea’s exports in April shrank at a faster rate than in March, when the fall was 8.5 percent year-on-year. Imports fell 17.1 percent in March.

A report by the Trade Ministry released on Monday said other than smartphones and computer chips, most major Korean exports in May were tumbling due to the low price of oil and products derived from it and the damaged competitiveness of Korean goods due to the weaker Japanese yen.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]