South Korea’s current account in May managed to eke out black figures after dipping into the red for the first time in seven years in April, but whether the surplus streak can be kept up is doubtful due to thinning trade surplus from worsening exports.
According to preliminary data released by the Bank of Korea on Thursday, Korea’s current account registered $4.95 billion in surplus in May, reversing from a $660 million deficit in April - the first red in the balance since 2012.
The turnaround largely owed to a $1.16 billion surplus in primary income account, which in April recorded a big deficit due to the seasonal increase in stock dividend payouts to foreign investors.
The surplus in goods account, however, shriveled to $5.39 billion in May, the lowest since January 2014. Exports plunged 10.8 percent on year to $48 billion, extending loss for six straight months due to a slowdown in global trade from the ongoing trade disputes between the world’s two biggest economies the United States and China, as well as a protracted slump in the semiconductor industry dragging down chip prices.
Imports fell 1 percent to $42.6 billion on a fall in energy costs and a decrease in imports of machinery amid slowdown in the country’s manufacturing industry.
Service account deficit in May narrowed to $900 million, the smallest since December 2016, from $1.43 billion a month earlier and $2.09 billion a year ago thanks to improvements in the balance of travel and transportation accounts. The deficit in travel account slipped to $940 million on a recovery in Chinese tourists to Korea that topped 500,000 for the first time in 27 months. Travel account payment slowed to $2.51 billion with a fall in the number of Koreans traveling overseas.
In the financial account, net assets increased by $4.55 billion in May. Koreans’ overseas investment grew by $3.82 billion and those made by foreign investors in Korea expanded by $1.22 billion. Korean’s overseas securities investment rose by $2.66 billion and those by foreign investors in Korea was up by $3.59 billion.
By Lee Yu-sup and Lee Ha-yeon
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