Last Year's Travel Balance Improved... but Impact of 'New Coronavirus' Inevitable

The Bank of Korea: "Impact on Travel Balance if Entry and Exit Restrictions Are Imposed Due to Novel Coronavirus"

Due to the impact of the novel coronavirus infection, half of the national airline routes between Korea and China have been suspended, and the suspension is expanding to flights to Hong Kong and Macau. According to the aviation industry, Jeju Air has decided to temporarily suspend its Incheon-Macau route starting from the 7th. Additionally, the Jeju-Hong Kong route will also be suspended from the 19th of this month. Other LCCs such as Jin Air and Air Busan are also expanding the suspension of routes to Chinese-speaking regions outside mainland China. The photo shows the quiet low-cost carrier check-in counters at Incheon International Airport on the 6th. / Yeongjongdo, Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Jang Sehee] Last year, South Korea's annual current account surplus recorded its lowest level in seven years, while the travel balance showed improvement for the second consecutive year compared to the previous year. However, experts predict that the travel balance will worsen further due to the novel coronavirus (Wuhan pneumonia) outbreak.

According to the "December 2019 Balance of Payments (Provisional)" released by the Bank of Korea on the 8th, last year's current account surplus was $59.97 billion, down $17.5 billion from the previous year. This is the lowest level in seven years since 2012 ($48.79 billion).

The travel balance showed a deficit of $10.67 billion, improving for the second consecutive year compared to the previous year. The Bank of Korea stated, "While the number of inbound travelers, mainly from China, increased significantly, outbound travelers stagnated due to a sharp decline in travelers to Japan following the Korea-Japan trade dispute."

However, there is analysis that if the number of travelers sharply decreases due to the impact of the novel coronavirus, the travel balance could also be hit.

Park Yang-su, Director of the Economic Statistics Department at the Bank of Korea, said, "If entry and exit restrictions occur, the travel balance could be significantly affected in the long term."

Experts point out that if domestic demand in China contracts, it could also shock the Korean economy. Professor Sung Tae-yoon of Yonsei University’s Department of Economics said, "Given the increasing trade volume with China, the impact of this coronavirus outbreak on South Korea’s economic growth rate will be very significant," adding, "If trade with China decreases and the global economy slows down, a downward revision of South Korea’s economic growth rate is inevitable."

Professor Kim Sang-bong of Hansung University’s Department of Economics also warned, "China’s economic growth rate could drop to around 5%. If the situation in China worsens and exports decline, the current account surplus will generally decrease and our economic growth will slow down."

Meanwhile, exports amounted to $561.96 billion, down 10.3% from the previous year. The causes include ▲price declines of major items such as semiconductors ▲weak exports to China ▲global economic slowdown due to the US-China trade conflict. Imports decreased by 6.0% to $485.11 billion, due to falling international oil prices and reduced imports of capital goods such as semiconductor manufacturing equipment.

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