Korea’s account surplus narrowed in DecemberKorea’s current account surplus narrowed sharply in December as its exports fell at a faster rate than imports, central bank data showed Thursday.
The country’s current account surplus came to $4.33 billion in the month, down $1.64 billion from the month before, according to preliminary data from the Bank of Korea (BOK).
The reading also marks a $580 million drop from the same month in 2018. The country’s current account balance has been in the black for eight consecutive months, since May 2019.
The drop appears partly attributable to a steady decline in exports, which in December dipped 3.5 percent on-year, while imports only inched down 0.3 percent.
Korea posted a goods account surplus of $5.03 billion for the month, compared with a surplus of $7.39 billion in November and a $6.63 billion surplus a year earlier.
Its service account deficit reached $2.5 billion, compared with a $1.89 billion deficit the month before and $1.85 billion a year earlier, according to the BOK.
The country’s primary income account surplus more than tripled to $2.67 billion from $880 million over the same period on an increase in dividend income.
For the entire year, the country’s current account surplus came to $59.97 billion, sharply down from the $77.47 billion surplus posted in 2018 and marking the lowest since 2012, when its current account surplus came to $48.8 billion, according to Park Yang-su, head of the BOK’s economic statistics department. The reading still marks the 22nd consecutive year of a current account surplus.
“The drop in surplus was largely caused by a drop in the goods account surplus amid a slowdown in the global economic growth due to the slump in the global semiconductor industry, the U.S.-China trade dispute and Brexit,” Park told a press briefing.
Korea’s exports dropped every month in 2019 amid the prolonged trade dispute between the world’s two largest economies. The United States and China are also the largest importers of Korean goods.
Its goods account surplus narrowed to $76.86 billion last year, down from $110.09 billion a year earlier, as its exports plunged 10.3 percent on-year to $561.9 billion last year, while imports dipped 6 percent to $485.1 billion.
However, its service account deficit narrowed to $23 billion from $29.37 billion in 2018, possibly due to a lower number of Koreans visiting Japan.
“With its dividend income climbing to a new high [of $22.68 billion], its dividend account balance turned to black from a $3.32 billion deficit in 2018,” Park said.
“Its interest account surplus also climbed to a new high as its interest income surged to a new record high of $18.24 billion,” he added.
He added the coronavirus outbreak is unlikely have any immediate impact, but it may begin to negatively affect the country’s recovery should it persist in China.