Current account surplus tops $10 billion for third consecutive month

Korea Economic Daily

Summary

The Bank of Korea said July's current account recorded a $10.78 billion surplus, exceeding $10 billion for three consecutive months.
Strong semiconductor and automobile exports were major contributors to the expansion of the current account surplus.
The BOK expects this year's current account surplus to reach $110 billion, the largest on record.

July $10.78 billion… 27 months in surplus

Bank of Korea "This year up to $110 billion expected"

The current account surplus exceeded $10 billion for three consecutive months due to strong semiconductor and automobile exports. The Bank of Korea said it expects this year's current account surplus to reach $110 billion, the largest on record.

The BOK said on the 4th that the provisional current account for July recorded a surplus of $10.78 billion. It was the largest surplus on record for July, though down from the previous month ($14.27 billion). The surplus exceeded $10 billion for three consecutive months since May ($10.14 billion). The goods balance surplus was the largest at $10.27 billion. Exports rose by 2.3% year-on-year to $59.78 billion as semiconductor (30.6%) and passenger car (6.3%) exports increased sharply. Exports to regions such as Southeast Asia (17.2%) and the European Union (EU·8.7%) increased. Exports to the United States rose by only 1.5%. Imports amounted to $49.51 billion, down 0.9% year-on-year due to lower energy prices.

Song Jae-chang, head of the BOK's Financial Statistics Department, explained, "The strong trend in semiconductor exports is expected to continue into next year, and automakers are diversifying exports to markets such as the EU and Australia," adding, "The impact of U.S. tariffs is expected to begin in earnest from next month."

The services balance recorded a deficit of $2.14 billion in July. The deficit narrowed from the previous month (-$2.53 billion). The travel balance deficit narrowed from $1.01 billion in June to $900 million in July as foreign visitors traveling domestically increased. The primary income balance recorded a surplus of $2.95 billion.

The BOK forecasts this year's current account surplus will reach a record $110 billion. Kim Woong, deputy governor at the Bank of Korea, explained, "Semiconductor exports are better than expected, and oil prices falling to the mid-$60s per barrel in the second half widened the goods balance surplus."

Reporter Kang Jin-kyu josep@hankyung.com