Current account in surplus for ninth consecutive month

Cargo to be exported overseas being loaded on a dock in Busan on March 2. Growing expectations of a global recovery has helped improve Korea's current account balance. [YONHAP]

Korea logged a $7.06 billion current account surplus in January, the ninth consecutive positive monthly reading.

The latest surplus was largely driven by strong exports, especially of automobiles and semiconductors, as expectations grew that the pandemic was coming to an end.

According to the Bank of Korea on Tuesday, the latest surplus surged 12-fold compared to the $580 million surplus in January 2020.

The goods account surplus contributed the most. In January, it was a positive $5.7 billion, which is more than double the $2 billion surplus logged a year earlier. Exports when compared to the year earlier period grew 9.1 percent, or $3.88 billion, to $46.6 billion.

Computer chip exports grew 20.6 percent on year, while automobile exports grew 43 percent.

Growing confidence for a global economic rebound has also contributed to an increase in imports. Imports when compared to the same month last year grew 0.5 percent to $40.9 billion. That’s $220 million more.

Korea’s current account recorded a deficit in April last year as Covid-19 began to take its toll. It was not only the first deficit in a year but also the largest in almost a decade.

Since May, the current account surplus has been steadily increasing.

“We’ve been seeing a significant increase in exports since late last year,” said Lee Seong-ho, Bank of Korea financial statistics division director.

The director added that as a result of the increase in Korean exported goods, imports of materials have gone up as well.

The service account also improved, with deficits shrinking significantly. But this was largely due to a significant drop in Koreans traveling abroad due to Covid-19.

The service account in January was in deficit by $610 million. A year earlier, the deficit was nearly $3 billion.

The transportation account recorded a 1-billion-dollar surplus helped by strong cargo business. In the same month last year, transportation was in deficit by $110 million.

The travel account shrunk sharply, from a $1.4 billion deficit in January 2020 to a $550 million deficit. Compared to the year ago period, those entering Korea dropped 96 percent while those exiting the country fell by 97 percent.

Aggressive stock investment since late last year was evident in the latest report.

The primary income account, which shows earnings made via dividend and interest, last month logged a $2.36 billion surplus. That’s a 44 percent more than a year ago.

Equity income nearly doubled to $1.48 billion on increases in overseas dividend payments to local companies.

According to the bank, in January overseas investment grew by nearly $11 billion. The increase is an all-time record.

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