Korea logs current account surplus for third straight month

Economy

Published: 08 Sep. 2023, 15:42

Korea logs current account surplus for third straight month

Containers are stacked up at a port in Busan on Aug. 1. [JOONGANG PHOTO]

Korea’s current account surplus reached $3.58 billion in July, staying in the black for a third consecutive month as the trade surplus grew, according to preliminary data from the Bank of Korea on Friday.

The July surplus was down from $5.87 billion in June due to a plunge in primary income but up from $1.70 billion in surplus in the same month a year earlier.

The goods account logged a surplus of $4.28 billion, up from $3.98 billion the previous month. The account swung into the black from $520 million in the red on-year.

Exports fell 16.4 percent from a year earlier, led by a deceleration in petroleum products, chips and vessels. Exports to China and Southeast Asian countries plunged more than 20 percent in the same period.

“The direction of the economy, headed in an account surplus, has become clear,” said Lee Dong-won, director of the monetary and financial statistics division at the Bank of Korea, in a press conference held at the bank's headquarters in central Seoul on Friday. “A fall in exports has also narrowed, raising expectation that the figure will swing into growth in the fourth quarter.”

Lee noted uncertainties in the global oil prices.

“A continued rise in global oil prices may restrict the current account surplus, but the economy is not suffering a recession as exports are on the path of recovery.”

Futures on U.S. West Texas Intermediate Crude Oil rose above $85 in September, up from around $70 in June.

The deficit in the services sector narrowed to $2.53 billion from a loss of $2.61 billion in June, despite an expanded deficit in accounts for travel and manufacturing services. The surplus in transport grew while the deficit in the use of intellectual property narrowed.

The primary income account, which measures the wages of foreign workers and dividend payments from overseas, plunged to $2.92 billion in July from $4.85 billion a month earlier due to a decrease in investment income.

“Dividend income may retreat relatively since it was so high in the first half of the year. But companies’ retained income remains high and the companies’ capacity to distribute dividends is sufficient as challenges faced by IT companies overseas are projected to ease as we near the end of the year,” Lee added.

The accumulated current account surplus reached $6.01 billion through July this year, down from $26.57 billion in the same period a year ago.

BY JIN MIN-JI [jin.minji@joongang.co.kr]