Korea’s current account returns to surplus in December

Port of Busan [Photo by Kim Ho-young]

South Korea’s current account balance swung to a surplus in December last year on improved dividend payments, although the goods account stayed in the red for a third month in a row due to a plunge in chip exports.

According to data from the Bank of Korea (BOK) on Wednesday, the country’s current account surplus stood at $2.68 billion in December compared with a $220 million deficit in the previous month. The gain, however, was smaller, than a year ago at $6.37 billion.

For the full year, Korea’s current account surplus came to $29.83 billion, only one-third of $85.2 billion in 2021. The surplus exceeded the BOK’s annual target of $25 billion.

The goods balance continued its deficit trend for a third month in December.

Exports fell 10.4 percent to $55.7 billion from the same period a year ago. Exports declined for a fourth month in December after outbound shipments fell for the first time on year in September.

Exports of semiconductor plunged 27.8 percent on year in December due to the slowing economy, steel 20.5 percent, and chemical industrial products 17.2 percent.

Exports to China dipped 27.1 percent, Southeast Asia 23.7 percent, and Japan 10.3 percent.

Imports also fell 2.7 percent on year to $56.1 billion, marking the first on-year decline in two years.

Imports of raw materials rose 0.7 percent in December from a year ago. Gas imports soared 52.2 percent, crude oil 16.9 percent, and coal 12.5 percent.

Imports of capital goods, on the other hand, fell 6.4 percent led by a 11.2 percent decline in chips and those of consumer goods 4.9 percent led by home appliances that fell 8.1 percent.

Service account remained in the red, widening by $630 million on year to $1.39 billion.

Transportation account managed to stay in the black with a surplus of $170 million, but it is $1.8 billion less than a year ago. The Shanghai Containerized Freight Index, the global benchmark in short-term shipping rates, dipped 76.9 percent in December from a year earlier.

The travel account deficit also widened to $1.14 billion in December from $740 million a year ago as more Koreans traveled abroad amid easing in Covid-19 travel restrictions.

The country’s primary income account surplus reached $4.79 billion, up $1.3 billion from a year ago. Dividend income surplus reached $4.49 billion, up $1.7 billion from a year ago. The BOK said dividend payments at Korean Inc. from their overseas corporations increased.

Net assets in the financial account increased by $5.6 billion in December.

Direct overseas investment by Koreans soared by $4.37 billion. Foreign direct investment in Korea, on the other hand, decreased by $3.05 billion.