Korea’s surplus with U.S., China decreases

Korea’s goods account surplus with major trading partners such as the United States and China decreased last year, though its surpluses with emerging markets in Southeast Asia grew.

The country’s goods account surplus with the United States hit a five-year low last year, but its service account deficit with the world’s biggest economy expanded to record levels, central bank data showed Thursday.

The goods account surplus with the United States stood at $39.99 billion in 2017, down sharply from $42.6 billion a year earlier, according to preliminary data released by the Bank of Korea (BOK).

The 2017 figure was the smallest since 2012, when Asia’s fourth-largest economy posted a surplus of $25.61 billion.

A drop in exports of vehicles and auto parts to the United States and a rise in imports of machinery led to the sharp decline, the BOK said.

Korea posted a loss of $15.38 billion, the largest in its history, in its service account last year. It paid the United States more in transportation services, intellectual property payments and business consulting services.

In total, the country’s current account surplus with its No. 2 trading partner fell to $25.62 billion from $31.49 billion over the one-year period.

Korea has been making an effort to cut its trade surplus with the United States by increasing imports of American shale gas and aircrafts since U.S. President Donald Trump signed a series of measures against its trading partners.

Meanwhile, South Korea’s current account surplus with China, its largest trading partner, reached $42.97 billion in 2017, down slightly from $43.39 billion a year earlier, according to the BOK.

The fall was largely driven by a plunge in the travel account to $3.47 billion from $7.78 billion after the Chinese government imposed a ban on group travel to Korea in March last year in retaliation for Seoul’s deployment of a U.S.-led missile defense system. The number of Chinese arrivals to Korea nearly halved to 4.17 million last year from 8.97 million.

With Japan, Korea’s current account deficit widened to $27.27 billion in 2017 from $21.51 billion a year earlier due to increased imports of precision machinery equipment.

Its travel account deficit with its neighboring country reached a record $3.26 billion on a rising Japanese travel boom in Korea.

Korea also faced an enlarged trade deficit with Europe of $9.06 billion this year, up from $8.17 billion over a year ago.

The current account deficit with Middle Eastern countries expanded to $44.78 billion last year from $26.74 billion due to rising crude oil prices. South Korea imports almost all of its oil from abroad.

The latest reading was not all about Korea’s weaker balance sheet. The current account surplus with Southeast Asian countries increased from $59.5 billion to $72.8 billion year on year.

“The growing exports of semiconductors and machinery offset the service account deficit,” the central bank said in the report.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]