Korea posts record current account deficit in Jan. on weak exports

[Photo by Yonhap]

South Korea’s current account balance swung to a deficit in January after a brief surplus in the previous month due to sluggish exports.

According to data released by the Bank of Korea on Friday, the country’s current account balance recorded a deficit of $4.52 billion in January, the largest deficit since the central bank began compiling related data in January 1980.

Korea’s current account balance managed to swing to a surplus of $2.68 billion in December last year thanks to an increase in dividend income from a deficit of $220 million in November.

The deficit in the goods account amounted to $7.46 billion in January, the largest deficit since data compilation. It is the fourth straight month of deficit and widened by $9 billion won from a surplus of $1.54 billion a year ago.

Exports fell 14.9 percent to $48 billion in January, dropping for a fifth straight month in a row after outbound shipments fell for the first time year over year in 23 months in September last year.

Exports of chips plunged 43.4 percent, steel products 24 percent, and chemical industrial products 18.6 percent. Shipments to China dipped 31.4 percent, Southeast Asia 27.9 percent, and Japan 12.7 percent.

Imports, on the other hand, rose 1.1 percent to $55.5 billion. Inbound shipments of automobiles jumped 65.9 percent and grains 6.1 percent.

Raw materials imports, however, fell 5.3 percent from the same month last year in January. Crude oil and petroleum product imports fell 11 percent and 12.4 percent, respectively.

Service account deficit in January amounted to $3.27 billion, widening by $2.44 billion from $830 million in January last year. The transportation account managed to keep a surplus of $120 million but the amount declined by $1.77 billion from $1.89 billion a year ago as the Shanghai Containerized Freight Index (SCFI) fell 79.5 percent during the same period.

The travel account deficit also nearly tripled to $1.49 billion from $550 million a year ago on eased Covid-19 restrictions.

The primary income account, which tracks wages of foreign workers and dividend payments overseas, recorded a surplus of $6.38 billion in January, up $4.51 billion from $1.87 billion a year ago.

The dividend income account surplus rose $4.55 billion over the one year to $5.66 billion as Korean companies’ overseas entities transferred huge amounts of dividends to their headquarters.

In the financial account, net assets decreased by $640 million in January. Koreans’ direct overseas investment grew by $1.77 billion and foreigners’ direct investment in Korea by $1.17 billion. Koreans’ overseas securities investment rose by $3.69 billion and those by foreign investors in Korea $5.4 billion.