Despite COVID-19, Export Performance Strong... Current Account Surplus from January to November Already Surpasses 2019 (Comprehensive Report 2)

'November 2020 Balance of Payments (Preliminary)'
Cumulative Current Account Balance from January to November at 63.94 Billion USD
Already Surpasses Full-Year 2019 Level, Expected to Exceed Last Year's Forecast as Well

[Asia Economy Reporter Kim Eunbyeol] With key export products such as semiconductors showing strong performance, South Korea's current account balance has already recovered to pre-COVID-19 levels as of last year. In November of last year, South Korea's current account recorded a surplus of nearly $9 billion, marking seven consecutive months of surplus. The surplus margin expanded for six consecutive months compared to the same month of the previous year. On a cumulative basis from January to November, the current account reached approximately $64 billion, surpassing the 2019 annual current account (about $60 billion). If this trend continues, the annual forecast for last year ($65 billion) is also expected to be exceeded.

According to the "November 2020 Balance of Payments (Provisional)" released by the Bank of Korea on the 8th, the current account surplus in November last year was $8.97 billion. This is an increase of $3 billion compared to November 2019 ($5.97 billion), continuing a trend of expanding surplus margins for six consecutive months year-on-year. The current account is a statistic that sums all economic transactions including exports and imports of goods and services between countries, as well as capital and labor.

The goods balance recorded a surplus of $9.54 billion, with the surplus margin increasing by $2.15 billion compared to the same month last year. The factors leading to the goods balance surplus were continued strong exports and decreased imports due to falling oil prices. Exports in November amounted to $47.02 billion, turning to an increase compared to the same month last year after one month. The average daily export was $2.04 billion, maintaining an increasing trend for two consecutive months. Based on customs clearance, semiconductors increased by 16.4%, information and communication devices by 23.8%, and chemical products by 10.2%, leading the export growth. Imports recorded $37.48 billion, decreasing for two consecutive months compared to the same month last year.

Lee Seong-ho, head of the Financial Statistics Department at the Bank of Korea, stated, "Since the current account surplus size until November has exceeded the annual level of 2019, it is clear from the statistics that it has recovered to pre-COVID-19 levels." However, he explained, "The biggest reason for the current account surplus is the reduction in imports due to the decline in energy prices. Excluding this, it is similar to the 2019 level, and it is difficult to say that it has improved beyond pre-COVID-19 levels." The annual current account surplus reached a record high in 2015 (about $105.1 billion), which also benefited from low oil prices at that time.

Seongho Lee, Director of the Financial Statistics Department at the Economic Statistics Bureau of the Bank of Korea, is explaining the main features of the "November 2020 Balance of Payments (Provisional)" on the morning of the 8th at the Bank of Korea in Jung-gu, Seoul.

Another cause of the current account surplus was the significant reduction in the service account deficit as overseas travelers decreased due to the COVID-19 pandemic blocking air routes. The service account deficit in November was $720 million, with the deficit margin shrinking by $1.17 billion compared to the same month last year. The travel account deficit was reduced to about half compared to a year ago (-$950 million) as both inbound and outbound travelers decreased by 96%. The transportation account has maintained a surplus for four consecutive months due to the recovery of global trade, recording $400 million, turning to surplus compared to the same month last year.

However, the current account in November did not reach $10 billion following October, due to a decrease in primary income balance caused by increased dividend payments by foreign direct investment corporations. Dividend payments in November recorded $1.87 billion, and the primary income balance recorded a surplus of $420 million, which is $550 million less than the surplus of $970 million in the same month last year.

The financial account net assets (assets minus liabilities), which indicate capital inflows and outflows, increased by $8.95 billion. In direct investment, domestic investors' overseas investment increased by $3.33 billion, and foreign investors' domestic investment increased by $1.33 billion. In securities investment, domestic investors' overseas investment and foreign investors' domestic investment increased by $9.41 billion and $4.32 billion, respectively. This marks eight consecutive months and six consecutive months of increase, respectively. Domestic investors' overseas securities investment saw the largest increase since July 2019.

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