Cars boost current account surplus

Korea’s current account surplus widened in March to a four-month high as overseas shipments of cars, electronics and oil products rose while the European debt crisis weighed on global demand.

The surplus was $3 billion, compared with a revised surplus of $557 million in February, the Bank of Korea said in a statement yesterday. The current account is the broadest measure of trade, tracking goods, services and investment income.

Asia’s fourth-largest economy, which expanded at the fastest pace in a year in the first quarter, faces downside risks from the European debt crisis and high oil prices, the central bank said this month. It left borrowing costs unchanged for 10-straight months on April 13 as it forecast a “moderate recovery” in domestic demand.

“We’re passing a trough but global demand will likely remain weak, which bodes ill for exporters,” Yoon Yeo-sam, a fixed-income analyst at Daewoo Securities, said before the release. “With moderate growth and persistent inflationary pressure, policymakers seem to have limited room for moving interest rates in either direction.”

The surplus on traded goods was $3 billion last month compared with a revised $1.3 billion surplus in February, the report showed.

Total exports on a customs-cleared basis rose to $47.4 billion in March from $46.4 billion in February, according to yesterday’s statement. Imports totaled $44.9 billion, little changed from February.

Overseas shipments may fall 1.5 percent in April from a year earlier, according to the median estimate of nine economists in a Bloomberg News survey as of Thursday.

On April 16, the Bank of Korea reduced its economic growth forecast for this year from 3.7 percent to 3.5 percent citing risks from Europe’s debt woes and high oil prices.

The current account surplus is expected to narrow to $12.5 billion in 2013 from an estimated $14.5 billion this year, according to the central bank’s latest projection. The excess was $26.5 billion in 2011. Korea’s GDP rose 0.9 percent in the first quarter from the previous three months, the fastest pace in a year.

Bloomberg