November Current Account Balance Turns to Increase Year-on-Year... Surplus Margin Lowest Since August Last Year

Bank of Korea Announces Current Account Balance for November Last Year

Exports and Imports Both Decline... Merchandise Balance Also Shrinks

[Image source=Yonhap News]

[Asia Economy Reporter Shim Nayoung] The current account balance in November last year turned to an increase compared to the same period the previous year. However, on a monthly basis, it recorded the lowest level in three months. This was due to a decrease in the merchandise balance, which is exports minus imports, and a widening deficit in the services balance reflecting travel income and payments. The surplus in the primary income balance, which is the income earned by Korean nationals abroad minus the income earned by foreigners in Korea, also decreased.

On the 7th, the Bank of Korea announced that the current account balance for November 2019 was $5.97 billion, the lowest since August of the same year ($4.87 billion). However, it increased by $840 million compared to November 2018 ($5.13 billion), when the current account balance began to decline due to a sharp drop in semiconductor exports.

A Bank of Korea official explained, "The current account balance turning to an increase compared to the same month last year is the first time in nine months since February last year," adding, "However, it decreased compared to the previous month, so it is too early to evaluate it as a recovery."

The services balance deficit in November narrowed from $2.19 billion in the previous year to $1.89 billion. This was largely due to an improvement in the travel balance as the number of arrivals, mainly Chinese and Southeast Asians, continued to increase. However, compared to the previous month (-$1.72 billion), the deficit widened.

The number of arrivals in November increased by 7.9% year-on-year to 1.46 million. In particular, arrivals from China increased by 25.0%, and arrivals from Southeast Asia increased by 7.5%. Arrivals from Japan decreased by 13.8%. On the other hand, the number of departures decreased by 9.0% year-on-year due to a 65.1% drop in departures to Japan.

The primary income balance surplus in November was $970 million, expanding by $630 million compared to one year earlier ($340 million). This was largely due to a decrease in dividend payments abroad by foreign direct investment companies. On a monthly basis, this was the lowest level in seven months since April last year (-$4.18 billion), when the primary income balance recorded a deficit due to increased foreign dividends paid by Korean companies.

This content was produced with the assistance of AI translation services.