Current account logs $290M deficit in April after 11 months in the black

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Current account logs $290M deficit in April after 11 months in the black

Published: 11 Jun. 2024, 15:07

SHIN HA-NEE
shin.hanee@joongang.co.kr

Containers are stacked at a container yard at a port in Pyeongtaek, Gyeonggi, on Tuesday. [NEWS1]

Korea's current account broke an almost yearlong streak of monthly surpluses with a deficit in April.

Dividend payments for foreign investors mainly drove the downturn, while the goods account continued to rack up a surplus for the 13th month in a row.

The current account posted a deficit of $290 million in April, turning to a loss from the previous month’s surplus of $6.93 billion, according to preliminary data released by the Bank of Korea on Tuesday.

It marked the first loss in 11 months since April of last year, when the country logged a deficit of $1.37 billion, before swinging into the black by $2.3 billion in May.

For the first four months of this year, the current account registered a cumulative surplus of $16.55 billion, compared to a deficit of $7.33 billion during the same the year prior.

“As dividend payments by corporations were concentrated in April, payments to foreign investors came on a large scale, which led to the income on equity accounts turning to a deficit,” said Song Jae-chang, head of financial statistics at the Bank of Korea.

Song Jae-chang, head of financial statistics at the Bank of Korea, speaks during a press briefing held at the central bank in central Seoul on Tuesday. [BANK OF KOREA]

The goods account logged a $5.11 billion surplus, remaining positive for the 13th straight month, following $8.09 billion the previous month. The total goods account surplus for this year so far came to $24.05 billion, a turnaround from a deficit of $9.17 billion in the same period last year.

Exports climbed 18 percent in April from a year earlier to $58.17 billion, with robust chip demand continuing to drive growth.

By sector, chip exports soared 54.5 percent on year in April to $10.1 billion, according to data compiled by the Korea Customs Service. The auto sector also rose 11.4 percent to $6.58 billion, while steel products inched down 4.9 percent to $4.04 billion.

Imports rose 9 percent on year to $53.06 billion, mainly due to an increase in energy prices as well as growth in import volume across all categories.

The services account deficit shrank to $1.66 billion from a deficit of $2.43 billion in March, bringing the cumulative loss this year to $8.53 billion as the account remained in the red for a 24th month in a row.

The travel account deficit came in at $820 million in April, smaller than the previous month’s loss of $1.07 billion but nearly twice the deficit of $440 million a year ago.

The primary income account — which tracks the net income earned in the country through wages as well as dividend payments and interest income from abroad against the respective outflow from Korea — turned to a deficit of $3.37 billion from a surplus of $1.83 billion in March. A year earlier, the figure stood at $740 million in the red.

With exports continuing to propel growth, the central bank expects the current account to swing back to a surplus in May.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]