S. Korea’s current account returns to surplus in March

May 10, 2023

South Korea logged a current account surplus in March as dividend payments from overseas increased amid an extended slump in exports, central bank data showed Wednesday.

The country’s current account surplus reached US$270 million in March, swinging from a shortfall of $520 million a month earlier, according to the preliminary data from the Bank of Korea (BOK).

In January, the country also suffered a record deficit of $4.21 billion amid an extended decline in outbound shipments.

Consequently, the country reported a current account deficit of $4.46 billion in the first quarter, marking the first time for a deficit on a quarterly basis in 11 years.

March’s surplus came as a deficit in the goods balance narrowed and the primary income account, which tracks wages of foreign workers and dividend payments overseas reported an increased surplus, the data showed.

Exports shrank 13.6 percent on-year to $55.11 billion in March, caused by weak demand for semiconductors, which plunged 33.8 percent on a customs-cleared basis.

Shipments to China and Southeast Asian countries dropped 33.4 percent and 23.5 percent, respectively, over the same period.

Imports, meanwhile, declined 6.4 percent in March to $59.74 billion.

Reflecting the data, the country posted a goods account deficit of $1.13 billion in March, the sixth straight shortfall, the data showed.

South Korea also posted a service account shortfall of $1.9 billion in March, the 11th straight month of a decline, the data showed. The deficit is partly blamed on increased overseas travel bolstered by eased virus curbs.

The primary income account, which tracks wages of foreign workers and dividend payments overseas, logged a surplus of $3.65 billion in March, up $3.1 billion from the previous month, largely thanks to increased dividend payments from overseas, the data showed.

The country may log a current account deficit in the first half of the year amid a continued decline in exports.

In April, the country’s exports declined 14.2 percent on-year, extending their losing streak to a seventh month, and its trade balance logged $2.62 billion in deficit in April, posting a trade deficit for the 14th consecutive month.

For the year, the central bank has expected a $26 billion current account surplus, but it hinted at revising down its forecast.