Korea’s current account returns to deficit in April

[Photo by Yonhap]

South Korea’s current account balance swung back into the red in April due to decreased dividend payments from overseas and a deficit in the travel-related account, central bank data showed Friday.

The country’s current account shortfall reached $790 million in April, according to the preliminary data from the Bank of Korea (BOK). The country posted a surplus of $160 million in March after two consecutive months of deficit for the first time in 11 years, with shortfalls of $4.21 billion in January and $520 million in February, but could not sustain the momentum.

As a result, the current account deficit for the first four months of this year reached $5.37 billion, down $20.38 billion from a surplus of $15.01 billion during the same period last year.

By item, the country posted a goods account surplus of $580 million in April, the first surplus in seven months since September.

Exports shrank 16.8 percent or $9.93 billion on-year to $49.11 billion in April. This is the eighth consecutive month of decline since September last year, when exports declined from the same month a year earlier for the first time in 23 months.

On a customs clearance basis, outbound shipments of semiconductors, petroleum products, steel products and chemical products plunged 40.5 percent, 27.4 percent, 15.7 percent, and 12.8 percent, respectively, due to the global economic slowdown. By region, exports to Southeast Asia, China, Japan, and the U.S. dropped 29.1 percent, 26.5 percent, 21.1 percent, and 4.4 percent, respectively, from a year earlier.

Imports also declined 13.2 percent, or $7.38 billion to $48.53 billion from a year ago. In particular, imports of raw materials fell by as much as 20.5 from the same month last year. Among the raw materials, imports of petroleum products, crude oil, coal, and gas shrank 39.7 percent, 30.1 percent, 21.3 percent, and 15.5 percent, respectively

Imports of consumer goods fell 6.7 percent, with decreases of 18.8 percent and 16.8 percent in home appliances and grains, respectively. Imports of capital goods also fell 3.4 percent, including a 15.7 percent decrease in semiconductors.

The balance of services also marked a shortfall of $1.21 billion, down by $1.59 billion from a $380 million surplus in April last year. However, the deficit slightly narrowed from $1.9 billion in March.

Specifically, travel balance logged a deficit of $500 million as overseas travel increased with eased Covid-19 restrictions, but the transportation balance posted a $30 million surplus, swinging from a deficit of $20 million in March.

The primary income account, which tracks wages of foreign workers and dividend payments overseas, turned to a deficit of $90 million in April from a surplus of $3.65 billion in March, largely driven by a $3.7 billion plunge in the dividend income balance from a $3.15 billion surplus to a $550 million deficit over the month.

The financial account net worth, calculated by subtracting all liabilities from assets, decreased by $4.82 billion in April. For direct investment, overseas investment by Koreans increased by $980 million but foreign investment in Korea decreased by $740 million. For securities investment, overseas investment by Koreans and domestic investment by foreigners increased by $1.75 billion and $5.38 billion, respectively.