South Korea incurred more than $3 billion deficit in its current account in April due to a rush of dividend payouts on top of the slump in exports that bruised its external balance to its worst since January 2011.

The country booked a deficit of $3.12 billion in April current-account balance, a sharp deterioration from a $5.96 billion surplus in March, according to the preliminary data from the Bank of Korea on Thursday. The deficit figure is the largest since January 2011. It is also the country’s first red in a year.

The U.S. dollar rose to 1,218.70 won from the previous closing of 1,216.8 despite a positive gain in the Kospi on Thursday.

Kim Yong-beom, first vice minister of economy and finance, assured that the country will recover a black streak from May, arguing April deficit was “one-off” result from the gush of dividend payouts following the fiscal settlement in March.

The current account, which consists of trade balance, net primary income, and net cash transfers, is a major measure of a country’s external business.

South Korea is sensitive in defending its current-account balance as the surplus feeds foreign exchange reserves as a buffer to a potential foreign capital flight after suffering a mass exodus in 1997 that sent the country to seek an international bailout.

The government has already warned of a deficit in April due to a plunge in exports amid COVID-19 pandemic.

In April, exports plunged 24.8 percent to $36.4 billion from a year earlier, while imports fell 16.9 percent on year to $35.6 billion.

The surplus in goods account, as a result, contracted to $820 million, compared with $6.7 billion in March and $5.6 billion a year earlier.

The deficit in service account expanded to $1.42 billion in April from $1.39 billion a month earlier and $1.27 billion a year earlier.

Tourism account deficit narrowed to $340 million from $370 million in March and $440 million a year earlier as the number of Korean travelers to overseas destinations plummeted 98.6 percent compared to the same month a year ago while foreign visitors to Korea declined 98.2 percent amid the COVID-19 pandemic.

The primary income account posted a $2.29 billion deficit. It was a reversal from $930 billion surplus in March but narrowed from $4.18 billion deficit a year earlier.

The dividend payment account showed a deficit of $3.01 billion in April, lower than $4.87 billion deficit a year earlier but a reversal from $40 million surplus in March.

In the financial account, net assets decreased by $6.32 billion in April. Koreans’ overseas investment grew by $660 million and those made by foreign investors in Korea were up by $550 million. Koreans’ overseas securities investment rose by $7.18 billion and those by foreign investors in Korea gained by $3.07 billion.

By Cho Jeehyun

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