Korea posts smallest current account surplus in 7 yrs on trade slump

2020.02.06 10:13:17 | 2020.02.06 10:13:50

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South Korea’s current account surplus narrowed in December from the previous month, ending 2019 at the slimmest surplus in seven years as global trade tensions took a heavy toll on the export-reliant economy.

The country recorded a current account surplus of $4.33 billion in December, extending its surplus streak for the eighth straight month but down $1.64 billion from November, according to preliminary data from the Bank of Korea on Thursday.

For the full year, the surplus came to $59.97 billion, the smallest since $47.79 billion in 2012. The country’s current account balance has been in the black since the Asian financial crisis in 1998.

The poor results were due to the global trade slump from the U.S.-China tariff war and the prolonged downturn in the chip market, one of Korea’s biggest export items, the bank explained.

The country’s goods account surplus in 2019 was $76.86 billion, down $33.23 billion from the previous year.

Export of goods plummeted 10.3 percent to $561.96 billion. Import also dipped 6.0 percent to $485.11 billion on falling oil prices and reduced spending on chipmaking equipment.

The country, however, saw its service account deficit narrow $9.05 billion to $23.02 billion last year.

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Tourism account deficit was narrowed to $10.67 billion from $16.57 billion in 2018, as Koreans refrained from traveling to Japan amid the ongoing boycott following a diplomatic spat that erupted last July.

The number of Chinese and Japanese visitors to Korea surged, lifting the tourism income last year to a record $21.63 billion. Meanwhile, tourism expenditures fell $2.83 billion to $32.3 billion.

Transportation current deficit was trimmed to $1.62 billion from $2.51 billion in 2018, also helping to improve the service account balance.

Korea’s primary income account surplus hit an all-time high of $12.2 billion in 2019.

Dividend income account went from $3.32 billion deficit to $3.31 billion surplus. Dividend earnings jumped to a record $22.68 billion as local headquarters collected more dividends from their offshore units.

Interest income surplus also hit a fresh high of $9.52 billion, as interest generated overseas surged to $18.24 billion.

By Kim Hyo-jin

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