September Current Account Surplus Hits Two-Year High... "On Track to Easily Meet This Year's Forecast" (Comprehensive)

Bank of Korea Announces September 2020 Balance of Payments (Preliminary)

Current Account Surplus of $10.21 Billion in September... Largest in 2 Years, Surpassing $10 Billion
Exports of Semiconductors, Chemical Products, and Passenger Cars Lead Growth

Park Yang-su, Director of the Economic Statistics Bureau at the Bank of Korea, is explaining the main features of the September 2020 balance of payments (provisional) at the Bank of Korea in Jung-gu, Seoul, on the morning of the 5th.

[Asia Economy Reporter Eunbyeol Kim] Thanks to the rebound in exports, the current account balance in September posted the largest surplus in two years. The current account, which sharply declined immediately after the outbreak of COVID-19, has been in surplus since May. In September, both exports and imports turned to year-on-year growth for the first time in seven months, marking a surplus exceeding 10 billion dollars per month.

According to the 'September 2020 Balance of Payments (Provisional)' released by the Bank of Korea on the 5th, the current account surplus in September reached 10.21 billion dollars. This is the largest scale in two years since September 2018 (11.24 billion dollars). September 2018 was the tail end of the semiconductor boom. The cumulative current account balance from January to September was 43.4 billion dollars, turning to an increase compared to the same period last year.

Park Yang-su, Director of the Economic Statistics Bureau at the Bank of Korea, stated, "Although the current account surplus may slightly decrease in October, the positive trend will continue," adding, "The annual current account forecast (54 billion dollars) will be comfortably achieved, and it is likely to approach last year's current account surplus (60 billion dollars)."

Exports in September, centered on semiconductors, chemical products, and passenger cars, recorded 49.85 billion dollars, an 8.0% increase compared to the same month last year. Park Dong-jun, head of the International Balance of Payments Team at the Economic Statistics Bureau of the Bank of Korea, said, "Although semiconductor prices fell, the volume compensated, resulting in semiconductor exports increasing by more than 10% year-on-year." The average export growth rate for September to October was also around 1.9%, indicating that the export improvement trend continues despite the Chuseok holiday.

Imports also increased by 1.0% year-on-year to 37.83 billion dollars, turning to growth. Although energy prices showed weakness, imports of capital goods and consumer goods, centered on semiconductor manufacturing equipment and passenger cars, increased. Accordingly, the goods balance (12.02 billion dollars) expanded its surplus by 3.32 billion dollars compared to the same month last year.

The service balance deficit was 2.04 billion dollars, reducing the deficit by 220 million dollars compared to the same month last year. Due to the COVID-19 situation, overseas departures sharply decreased, and income from maritime and air cargo transportation increased, reducing the service balance deficit. The primary income balance recorded a surplus of 610 million dollars, decreasing the surplus by 930 million dollars compared to the same month last year. This was due to a decrease in overseas dividend income of domestic companies and an increase in payments.

Overseas stock investments by domestic investors continued. In September, domestic investors' overseas stock investment was 2.28 billion dollars, increasing for 55 consecutive months. Including bonds, domestic investors' overseas securities investment was 3.02 billion dollars, increasing for six consecutive months. Due to political uncertainties in the United States and other factors, foreign investors' domestic stock investment decreased for two consecutive months (-2.29 billion dollars). Foreign investors' domestic bond investment increased for nine consecutive months, reaching 3.83 billion dollars.

Meanwhile, the Bank of Korea decided to postpone the announcement of last year's finalized balance of payments statistics due to difficulties in collecting basic data amid the spread of COVID-19. The annual finalized statistics, usually announced in December of the following year, are expected to be postponed to early next year.

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