(News1)

According to Pulse by Maeil Business News Korea,

South Korea’s current account remained in surplus for the fourth consecutive month in August 2024, thanks to strong exports of semiconductors and mobile phones.

According to data released by the Bank of Korea (BOK) on Tuesday, the country’s current account surplus stood at $6.6 billion in August. It was the fourth consecutive month of surplus following May ($8.92 billion), June ($12.56 billion) and July ($8.97 billion) after a deficit of $290 million in April that was attributable to an increase in foreign dividends.

The surplus amount, however, was about half of the size of June’s, which was the highest in 6 years and 9 months, and about $2.4 billion less than in July.

“Imports increased for two consecutive months, and the export growth of non-IT items slowed,” Song Jae-chang, head of the financial statistics team at the BOK, said. “The surplus in the primary income account also narrowed due to an increase in quarterly dividend payments related to securities investments.”

Nevertheless, the surplus for August was about $1.2 billion higher than $5.41 billion tallied during the same period a year ago. The cumulative current account surplus from January to August 2024 was $53.6 billion, a sharp increase of $42.93 billion compared to the same period a year ago when it was $10.67 billion.

The BOK expected the current account surplus trend to continue, driven by the growth in IT-related exports, adding that the country is on track to meet its second-half forecast of $35.3 billion presented in August.

Song also noted that the trade surplus based on customs clearance expanded in September compared to August and that the impact of quarterly dividend payments will be resolved that month.

“The current positive trend is likely to continue, given the macroeconomic environment and investment-related movements, such as continued demand for artificial intelligence (AI) investment, China‘s stimulus efforts, and expectations of a soft landing in the U.S. economy,” he said.

He also emphasized the presence of uncertainties, saying that “we need to monitor changes in major economies, the pace of domestic demand recovery in our country, and developments in the Middle East.”

By category, the goods balance maintained a surplus for the 17th consecutive month since April 2023 at $6.59 billion in August. While the surplus was smaller than $8.33 billion in July, it was larger than $5.2 billion in August a year ago.

Exports stood at $57.45 billion in August, up 7.1 percent from a year ago, continuing their upward trend for an eleven consecutive month after rebounding in October 2023 for the first time in a year and two months.

Exports of information and communication technology devices gained 44 percent, while those of semiconductors rose 38.3 percent and petroleum products 0.6 percent.

By region, exports to the EU rose 16.1 percent, while those to Southeast Asia went up 15.3 percent, the U.S. up 11.1 percent, China up 7.9 percent, and Japan up 6.6 percent.

Exports of chemical products, on the other hand, fell 4.4 percent and those of passenger cars declined 3.6 percent.

Imports rose by 4.9 percent on year to $50.86 billion, mainly led by an increase in imports of raw materials (6.1 percent), capital goods (7.8 percent), and consumer goods (2.0 percent).

The services account deficit narrowed to $1.23 billion in August from $2.38 billion in July and $1.55 billion in August a year ago. The travel deficit totaled $1.42 billion, widening from $1.26 billion in July due to the peak season for overseas travel during the summer, the BOK explained.

The surplus in the primary income balance narrowed to $1.69 billion in August from $3.15 billion in July, primarily due to a reduction in the surplus from dividend income, which fell from $2.79 billion in July to $1.18 billion in August, impacted by quarterly dividend payments on foreign securities investments.

Net financial assets, or assets minus liabilities, gained $4.93 billion in August.

Korea’s direct investment overseas grew by $4.46 billion while foreign direct investment at home rose $1.21 billion. The country’s securities investment abroad rose $8.64 billion, while foreign investments in Korea, particularly in bonds, increased $2.62 billion.



By Pulse

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Source: Pulse by Maeil Business News Korea (October 8, 2024)