BOK forecast current account deficit in January due to temporary spike in imports


Korea’s current account surplus shrank in December but for all of 2011 the country extended the surplus streak for the 14th year, the Bank of Korea said Monday.

The current account surplus stood at $3.96 billion last month, down from a revised $4.56 billion the previous month, as the country’s export growth slowed due to the protracted eurozone fiscal debt crisis. The figure has been in the black for 22 months in a row. 

The country posted a current account surplus of $27.65 billion last year, also down $1.74 billion from the previous year but slightly higher than the BOK’s earlier projection of a $27.2 billion surplus.

“Robust exports helped the country post a surplus last year,” said Kim Young-bae, director general of the BOK’s economic statistics division, at a news conference. “The January current account might be in the red but this is not related to the fundamentals of the Korean economy.”

For instance, the country posted a trade deficit in January and February in 2010, but managed to pull off a current account surplus of $29.39 billion for the whole year, Kim said.

“An increase in imports at the start of the year is not necessarily bad because it could be designed for more facility investment and it could be also the basis for bigger export volume,” Kim said.

Exports, which account for roughly 50 percent of the Korean economy, have lost steam in recent months as policymakers are struggling with the greater external risks. Korea’s economic growth also slowed to 0.4 percent in the October-December period last year from the previous quarter, marking the lowest gain in two years as the eurozone woes dented exports, consumption and investment.

Korea’s goods balance posted a surplus of $32.1 billion last year, also slowing from $40.1 billion a year earlier. Machinery, precision devices and automotives led the export drive.

For 2011, exports rose nearly 20 percent to reach $553.7 billion and imports came in at $521.6 billion. It was the first time that the combined total of exports and imports surpassed the 1,000 billion mark.

One positive development is that both exports and imports rose hand in hand last month. In the second half of last year, imports declined at a faster pace, resulting in a bigger surplus ― a phenomenon that signals a warning about steep decline in facility investment and local demand.

In December, exports rose 10.8 percent on-year to $48.9 billion and imports jumped 13.6 percent to $45.5 billion, softening concerns about the slowdown of the country’s exports.

By Yang Sung-jin (insight@heraldcorp.com)