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Current account surplus for first 6 months shrink 90% compared to a year agoBy Im Eun-byel
Published : Aug. 8, 2023 - 15:43
#Current account surplus for first 6 months shrink 90% compared to a year ago
South Korea logged a current account surplus for two consecutive months in June due to a trade surplus and increased dividends from overseas, central bank data showed Tuesday.
The country's current account gained $5.87 billion in June, following the $1.93 billion surplus from a month earlier, according to preliminary data from the Bank of Korea.
Prime Minister Han Duck-soo assessed that Korea was showing a sound performance when compared with other economies, by juggling difficulties in inflation control, economic growth and the labor market.
"Though the monthly flow of current accounts can go back and forth between surplus and deficit, the projection for a yearly surplus standing at $23 billion shows Korea is likely to maintain surplus for its current account," Han said, referring to the Finance Ministry's goal of the figure reaching a surplus of $23 billion by the end of this year.
“Though the target falls short when compared to $30 billion from last year, we are defending the soundness in the balance of payments,” he said.
In detail, the trade surplus for goods came to $3.98 billion in June, posting gains for three consecutive months from $580 million in April and $1.82 billion in May.
Exports dipped by 9.3 percent to $54.1 billion from the same month in 2022, marking a consecutive 10-month decline since exports marked a turnaround to decline in September.
Imports dropped sharper by 10.2 percent to $50.1 billion, as part of four-month consecutive decline due to lower energy import costs following a drop in international oil prices.
With more Korean residents departing overseas, the services account, including the travel balance, suffered an extended loss in June, reaching $2.61 billion, dropping lower than the previous month's $910 million.
The primary income account, which tracks the wages of foreign workers and dividend payments from overseas, reported a surplus of $4.85 billion, the data showed, up from the previous month's $1.42 billion.
The advance stemmed from an increase in the amount of dividends companies received from their overseas affiliates which reached $4.23 billion, more than four times the $900 million recorded a month before.
With July’s figures, Korea’s current account totaled at a surplus of $2.44 billion during the first six months of this year. Though it was much lower than the $24.87 billion surplus shown in the same period a year ago, it is higher than the BOK's projection of a $1.6 billion deficit made in May.
“Though the total amount of surplus decreased as the country posted the worst deficit in January, the performance is satisfactory considering many economic institutions forecasted a deficit in the first half of this year,” Shin Seung-cheol, director of the economic statistics department at the BOK, said during a press briefing held Tuesday.
The BOK predicts that Korea will have maintained a current account surplus for July. It forecasts that even if the services account remains sluggish, the surplus from the goods and primary income accounts will exceed the deficit.
Yet, uncertainties remain for Korea to meet its goal of reaching a $23 billion surplus in 2023.
“The volatility of external conditions is high with international oil prices, recovery of major economies including China and a rebound of the IT industry,” Shin said. “It is hard to say whether the figure can exceed the outlook for the year.”
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