Services account hits record deficit in Oct.Korea’s services account, which measures the amount of money generated from tourism and logistics, posted a record deficit in October, affected by the shrinking number of visitors to the country and an increase in the number of Koreans vacationing abroad.
The deterioration in the segment prompted the overall current account to see a narrowed surplus at $5.72 billion in October, according to preliminary data released by the Bank of Korea on Tuesday.
The latest surplus represents a 25.6 percent decline year on year and a 53.5 percent decrease compared to the previous month.
The services account deficit hit a record high of $3.53 billion as tourism, which accounts for the majority of the account, dwindled.
The major culprits were the conspicuously low number of Chinese tourists and the record number of Koreans that headed overseas during the long Chuseok holiday at the start of October.
“The number of those departing the country increased in early October because of the holiday,” the Bank of Korea said in a statement, “But the trend of less Chinese tourists to Korea continued in October, which was caused by a dispute over the deployment of the Terminal High Altitude Area Defense (Thaad) antimissile system.”
Package tours to Korea remained suspended until recently amid the fallout from the country’s decision to deploy the U.S.-led antimissile defense system, but a diplomatic breakthrough between Korea and China at the end of October showed signs that tourism may soon be bouncing back.
The central bank said the number of Chinese tourists stood at 345,000, down 49.3 percent versus a year ago.
Overall arrivals also went down 26.6 percent to reach 1.2 million.
An increase in the number of Koreans traveling abroad widened the account deficit as Korean tourism to other countries hit a record high of 2.32 million in October, increasing 19.6 percent from a year earlier.
The goods account used to be the driving force in the country’s balance sheet, but its surplus size fell short of expectations in October.
The goods account dropped by 6.1 percent from last October to $8.6 billion as the Chuseok holiday cut into the number of operating days, impacting export companies.
Still, the latest figure marks the 68th straight month that there has been a surplus for Korea, suggesting exports are still relatively healthy.
BY PARK EUN-JEE [firstname.lastname@example.org]
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