Korea posts current account deficit for second month in February

[Photo by Yonhap]

South Korea posted a current account deficit for a second straight month in February as exports remained sluggish on slowing global economy, central bank data showed Friday.

The country‘s current account shortfall was $520 million in February, down $6.38 billion from a surplus of $5.87 billion in February last year, but the deficit narrowed by $3.69 billion from a record $4.21 billion in January, according to the preliminary data from the Bank of Korea.

Exports shrank 6.3 percent on-year in February to $50.52 billion. It is the sixth consecutive month exports fell year-on-year. On a customs clearance basis, outbound shipments of semiconductors, chemical products, steel products plunged 41.5 percent, 9.8 percent and 9.2 percent, respectively, due to the global economic slowdown. By region, exports to Southeast Asia, China and Japan dropped 25 percent, 24.3 percent, and 5.4 percent, respectively, over the same period.

Imports, meanwhile, rose 4.6 percent to $51.82 billion from a year ago. In particular, imports of raw materials increased by 7.2 percent from the same month last year. Among the raw materials, imports of gas and chemical products increased by 72.5 percent and 10 percent, respectively.

Reflecting the data, the country posted a goods account deficit of $1.3 billion in February for a fifth consecutive month. The account plummeted from $4.35 billion in surplus a year ago. The size of the deficit narrowed from a shortfall of $ 7.32 billion in January, which was the largest since relevant data started to be compiled.

The country also posted a service account shortfall of $2.03 billion in February. The service account fell from a surplus of $90 million in February last year. In detail, the transportation account, which recorded a surplus of $1.42 billion a year ago, showed a $220 million deficit as the Shanghai Containerized Freight Index in February fell by 80.0 percent over the same period. The travel account deficit widened to $1.01 billion from $430 million in a year, as Covid-19-related restrictions eased.

The primary income account, which tracks wages of foreign workers and dividend payments overseas, logged a surplus of $3.12 billion in February, up $1.56 billion from $1.56 billion in February last year, largely due to a $1.62 billion increase in dividend income, the data showed.

The financial account net worth, calculated by subtracting all liabilities from assets, increased by $1.19 billion in February. For direct investment, overseas investment by Koreans increased by $3.66 billion and foreign investment in Korea by $360 million. For securities investment, overseas investment by Koreans and domestic investment by foreigners increased by $2.48 billion and $1.45 billion, respectively.