Account surplus grows

One day after the U.S. Treasury Department put Korea on its watch list for large current account surpluses and possible intervention in the foreign exchange market, Korea’s current account surplus widened even more in March, continuing its longest streak of growth.

The current account surplus stood at $10.09 billion last month, compared with a revised $7.17 billion surplus the previous month, marking the 49th consecutive month of surplus, according to preliminary data from the Bank of Korea (BOK) on Monday. The surplus widened as exports dropped 8.1 percent to $43.01 billion and imports slid 13.9 percent to $33.15 billion.

Exports of petrochemicals, display panels and ships significantly declined, the BOK said in its report. The fall in imports was led by a 24.3 percent plunge in commodities imports.

The on-month increase was mostly attributed to a rise in the goods account surplus, which posted $12.45 billion in March, up from a $7.54 billion surplus in February and a $10.89 billion one year earlier.

The services account deficit narrowed from $1.24 billion the previous month to $1 billion, owing to some improvement in the use of the intellectual property accounts, which in turn helped widen the current account surplus. March’s surplus accounts for 7.4 percent of last year’s GDP.

The U.S. Treasury said in a report released on Sunday that it will mark countries with current account surpluses above 3 percent of their GDPs for enhanced analysis. The Korean economy’s GDP growth outlook has been lowered by the central bank and other international organizations.

The increase in March’s surplus strongly suggests that the recession in the global trade market is solidifying as the surplus occurred due to larger drops in imports as compared to exports.

The primary income account reversed from an $850 million surplus in February to an $860 million deficit in March, due mostly to increased cross-border dividend payments by local firms, the BOK said. The financial account posted a $12.91 billion increase in net assets in March. The total net assets in the first quarter stood at $28.89 billion, the data showed.

Investments in securities, both at home and abroad, noticeably expanded, contributing to the increase in the financial account.

Koreans’ overseas securities investments surged $2.94 billion to $9.27 billion last month. Foreign investments in domestic securities rebounded from a $3.26 billion fall to a $3.4 billion increase. This is the first increase in 10 months.

“Thanks to oil price rebounds,” said Hwang Sang-pil, head of the international account team at the central bank, “eased monetary policies maintained by major countries and improving expectations on Chinese growth have attracted foreign capital into domestic securities as the tendency to shun risks has been reduced.”

Foreign direct investments dropped $640 million last month, widening from a $40 million drop in February. Meanwhile, Koreans’ overseas investments expanded $1.51 billion to $2.92 billion.

BY SONG SU-HYUN [song.suhyun@joongang.co.kr]