Current account surplus advances to new record

The current account rally continued for the 32nd consecutive month in October, edging closer to a record-high annual surplus.

However, the current account surplus is not a positive economic sign because it has not been caused by a boost in exports, but by a drop in imports that has been exacerbated by the falling prices of international commodities.

The Bank of Korea announced Thursday that the current account surplus in October was $9 billion, up from $7.4 billion the previous month.

The current account surplus rally has been ongoing since March 2012, making it the longest surplus streak since the 38-month rally that started in June 1986.

“We believe that the year end current account surplus might even exceed our projection,” said a BOK official.

The accumulated surplus in the first 10 months of this year is already very close to last year’s total surplus, which was an all-time record at $70.7 billion.

This year, the central bank expects the surplus to reach $84 billion, with the accumulated surplus as of October exceeding $70.6 billion.

The current account surplus is largely due to a surplus in the goods account, which expanded from $7.5 billion in September to $8.7 billion last month.

However, the goods accounts surplus has resulted from a drop in imports as exports saw the steepest fall in five years.

Exports last month were worth $52.2 billion, an 8.2 percent decline compared to the same period last year. This is the biggest drop in national exports since September 2009, when the value plunged by 17.3 percent due to the global financial crisis.

But at the same time, imports in October shrank by 7.5 percent year-on-year to $43.5 billion, the biggest drop in imports since February last year when it plummeted by 15.3 percent.

The drop in exports comes amid increasing concern over the nation’s economic growth, which seems to be decelerating.

Automobile exports saw the steepest fall, at 14.4 percent year-on-year despite 5.2 percent growth reported the previous month.

Information and telecommunication products such as smartphones also dropped after seeing a mild growth of 0.5 percent in September to fall 10.6 percent last month.

Exports to Europe fell sharply last month by 8.7 percent year-on-year, compared to a 5.2 percent year-on-year decline in September.

Although exports to China continued to grow, the rate has been cut in half from 6.4 percent in September to 3.5 percent. The only market that reported major year-on-year growth was the United States with a 24.9 percent increase, up from 19.8 percent the previous month.

In October, commodity imports fell by 3 percent. Crude prices saw a sharp decline, of 17.4 percent, as the dollar value per barrel declined 12.4 percent year-on-year.

BY LEE HO-JEONG [ojlee82@joongang.co.kr]