Korea’s current account surplus hits 9-mo high in July on robust overseas investment

2019.09.05 11:24:29 | 2019.09.05 13:05:59

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South Korea’s current account surplus hit a nine-month high in July after a narrowing service deficit and surge in income from overseas investment more than offset deterioration in the goods surplus.

Asia’s fourth-largest economy posted a current account surplus of $6.95 billion in July, the biggest since October 2018 when it stood at $9.35 billion, according to preliminary data released by the Bank of Korea on Thursday.

The July figures were 8.93 percent higher from the previous month but down 18.7 percent from a year earlier.

Korea has managed to stay in the black after posting a $664 million deficit in April, its first deficit in seven years.

The goods account surplus was trimmed to $6.19 billion in July from $10.8 billion a year earlier, as Korea’s trade-dependent economy continued to suffer from the ongoing tariff war between the United States and China and its own trade battle with Japan. Exports tumbled 10.9 percent on year to $48.3 billion, extending their decline for the eighth straight month. Imports fell for the third month in a row, down 3 percent at $42.1 billion.

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The service account, however, narrowed its deficit to $1.67 billion in July from $3.09 billion a year ago. The travel account deficit improved for the 11th straight month thanks to a recovery in the number of Chinese visitors. The transportation account deficit also narrowed for the 12th month in a row. The intellectual property rights account, which includes patent licensing fees, swung to a $110 million surplus from a $400 million deficit a year earlier.

Korea’s primary income account surplus surged to a record $3 billion, up from $1.54 billion a year ago as Koreans aggressively sought out investment in overseas assets amid lackluster market conditions at home. The investment income account surplus jumped from $1.65 billion to $3.08 billion over the same period. Dividend income climbed from $1.47 billion to $2.89 billion, the third-largest figure on record. Interest income also hit an all-time high of $1.9 billion.

Net assets rose $6.55 billion in July, with Korean investment in foreign securities up $9.97 billion and offshore investment in local securities up $4.86 billion.

By Kim Yeon-joo and Kim Hyo-jin

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