South Korea’s deficit in its travel account that had eased during the pandemic is widening as international travel returns to normal levels.

According to data from the Bank of Korea on Monday, the deficit in Korea’s travel account stood at $3.23 billion in the first quarter. Travel revenue came to $3.08 billion and expenditure $6.32 billion.

It is the largest deficit in more than 3 years after $3.28 billion in the third quarter of 2019. It is also the largest figure for the first quarter in five years after $5.3 billion in 2018.

The deficit in the travel account fell to $1.99 billion and $925 million in the first and second quarters of 2020, respectively, when the Covid-19 hit the country. The red figure had stood at $2.93 billion in the fourth quarter of 2019.

The decline came as the pandemic put international travel to a halt with a series of border shutdowns.

The deficit fell to the $20 million range in 2021 and 2022 before widening to more than $30 million in the first quarter on worsening tourism balance that excludes overseas education and training services.

The deficit in the overseas education and training balance rose 5.2 percent on quarter to $650 million in the first quarter but the deficit in the tourism balance increased by 46.8 percent to $2.58 billion.

The number of Koreans traveling overseas soared by more than 1,100 percent to 4.98 million in the first quarter from 410,000 in the same period last year.

The number of inbound travelers rose 500 percent to 1.7 million from 280,000 during the same period. The relatively slow growth is due to the slow recovery in the number of Chinese travelers.

A BOK analysis showed that the number of inbound foreign tourists in Korea reached 900,000 in April, which is 55 percent of the pre-pandemic level in the same month in 2019.

The recovery involving Chinese tourists, however, was 24 percent.

“The slow recovery in Chinese tourists is prevalent across the world,” said an unnamed BOK official.

The recent surge in the number of Korean travelers overseas is likely to stretch the deficit and the broader service balance, which may disrupt improvement in the country’s current account deficit, market watchers said.

Hyundai Research Institute said in its latest report that the deficit in the service balance, which includes the travel balance, will deteriorate due to the surge in the number of outbound travelers after the pandemic.

The report called for government measures to improve the overall competitiveness of Korea’s tourism industry.

By Pulse

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