January Current Account Balance Shows Minimal Impact from COVID-19... What About February?

BOK "February Current Account Balance, Difficult to Predict COVID-19 Impact"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Although the current account surplus in January this year significantly decreased compared to a year ago, the impact of the novel coronavirus disease (COVID-19) outbreak was not clearly evident. However, since February saw a sharp increase in COVID-19 cases, it is analyzed that the current account balance will be somewhat affected going forward.

According to the Bank of Korea on the 8th, despite the worsening of the COVID-19 situation centered on Hubei Province in China from late January, the impact on exports was found to be minimal.

In fact, according to the preliminary balance of payments statistics announced by the Bank of Korea on the 5th, the current account surplus in January recorded $1.01 billion, reflecting a decrease in working days due to the Lunar New Year holiday. This figure is $2.29 billion less than a year ago.

The service account deficit in January was $2.48 billion, with the deficit narrowing by $1.05 billion compared to the same period last year. This was due to a reduction in the travel account deficit. Before the COVID-19 outbreak fully took hold in January, foreign tourists increased, and the number of domestic departures decreased due to a decline in travel to Japan.

Professor Kim Soyoung of Seoul National University’s Department of Economics said, "The current account surplus could shrink due to COVID-19." She added, "With the rapid increase in confirmed cases in February, China’s perceived economic conditions also declined. This situation arose when exports were already weak, compounded by the COVID-19 variable."

However, the Bank of Korea maintains that it is difficult to predict the impact of COVID-19 after February. A Bank of Korea official stated, "Since factors such as decreases in exports and inbound tourists and increases such as declines in imports and oil prices are mixed, it is difficult to anticipate future effects," and refrained from further comment.

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