Despite Last Year's 'Largest Surplus in 9 Years' in Current Account, South Korea Remains Cautious

Surpassed $99 billion with a 200% Increase

Uncertainty Grows with Trump Tariffs

Trade Environment and Export Fronts Clouded

Last year, South Korea's current account approached $100 billion, marking the largest surplus in nine years since 2015. The export of semiconductors and information and communication devices showed strong performance, leading to a significant surplus in the goods account. The Bank of Korea forecasts that the current account surplus trend will continue this year, but it also diagnoses a high level of uncertainty due to the trade and economic policies of the Trump administration. The government is cautious about whether South Korea's significant surplus, amidst the U.S. recording its largest trade deficit last year, might attract the attention of the Trump administration.

Despite Last Year's 'Largest Surplus in 9 Years' in Current Account, South Korea Remains Cautious According to the 'International Balance of Payments for December and Annual 2024' released by the Bank of Korea on the 6th, last year's current account recorded a surplus of $99.04 billion. This is the largest since the $104.1 billion surplus in 2015, increasing by $66.22 billion (202%) from $32.82 billion in 2023. It exceeded the Bank of Korea's initial forecast of $90 billion by 10%.

By category, the goods account surplus led the trend with $100.13 billion. In particular, exports to the United States increased by 5.5%, turning to an upward trend. The primary income account, consisting of wages, dividends, and interest income, recorded a surplus of $26.62 billion, similar to 2023. The service account deficit slightly narrowed from $26.82 billion to $23.7 billion.

On a monthly basis, last December's current account was $12.37 billion, up from $10.05 billion in November. It was the largest on record for December. The goods account showed a surplus of $10.43 billion. While exports of semiconductors remained strong, the decline in non-IT items such as passenger cars slowed. The service account recorded a deficit of $2.11 billion due to the peak season for overseas travel during the winter vacation.

The government is tense as the U.S. is poised to impose tariffs on countries with trade surpluses with it. An official from the Ministry of Trade, Industry and Energy said, "We believe that South Korea has not yet become a target of Trump's policies," but added, "We plan to actively explain that the increase in the goods account surplus is due to Korean companies investing in the U.S., leading to increased exports through facility investment."

Reporters: Kang Jin-kyu/Ha Ji-eun josep@hankyung.com