Korea records current account surplus of $270 million in March

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Korea records current account surplus of $270 million in March

Published: 10 May. 2023, 18:08 Updated: 10 May. 2023, 18:45

Containers are being unloaded in Busan Port on March 10. [YONHAP]

Korea recorded a current account surplus in March due to an increase in dividend payments from overseas, despite the prolonged decline in exports.

The country's current account reached $270 million in March, a reversal from a deficit of $520 million in February, according to the preliminary data from the Bank of Korea on Wednesday.

The improvement in the current account balance was attributed to both an increase in the surplus of the primary income account, which tracks wages of migrant workers and dividend payments overseas and a narrower deficit in the goods balance.

However, last month's surplus was not enough to offset the record deficit of $4.21 billion registered in January, resulting in the country's first quarterly current account deficit in 11 years.

The decline in exports has been a major contributor to Korea's current account woes.

In March, exports shrank by 13.6 percent year-on-year to $55.11 billion, driven by weak demand for semiconductors.

Shipments to China declined 33.4 percent, and those to Southeast Asian countries also dropped 23.5 percent during the same period.

Meanwhile, imports fell by 6.4 percent to $59.74 billion in March.

As a result, Korea's goods account posted a deficit of $1.13 billion in March, marking the sixth straight month of shortfall.

Korea faced another setback in its service account, recording a drop of $1.9 billion in March, the 11th consecutive month of decline. The deficit is partially attributed to a rise in overseas travel fueled by relaxed travel restrictions.

On a positive note, the primary income account reported a surplus of $3.65 billion in March, up from the previous month and driven by an increase in dividend payments from overseas.

Korea's current account is expected to remain under pressure in the first half of the year amid a persistent decline in exports.

In April, exports fell by 14.2 percent year-on-year, extending their losing streak for the seventh consecutive month. The trade balance recorded a deficit of $2.62 billion, the 14th consecutive month to record a deficit.

While the central bank initially projected a $26 billion current account surplus for the year, the BOK hinted at revising down its forecast in light of the challenging economic conditions.

BY SEO JI-EUN, YONHAP [seo.jieun1@joongang.co.kr]