Export Boom Boosts Cargo and Freight Rates for National Shipping Companies... Transport Balance Records 'All-Time High' Surplus (Comprehensive)

Bank of Korea 'July 2021 Balance of Payments (Preliminary)'
July Current Account Surplus of 8.21 Billion USD... 15 Consecutive Months of Surplus

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] The current account balance posted a surplus for the 15th consecutive month in July, supported by continued export growth and the recovery of international transportation such as maritime cargo. The transportation account recorded an all-time high surplus.

According to the "July 2021 Balance of Payments (Provisional)" released by the Bank of Korea on the 7th, the current account surplus in July reached $8.21 billion, expanding by $1.19 billion compared to the same month last year. The current account has maintained a surplus for 15 consecutive months.

As a result, the cumulative current account surplus from January to July this year amounted to $52.55 billion.

The increase in maritime cargo transportation income led to a significant surplus in the transportation account, which in turn improved the service account and positively impacted the current account. Lee Seong-ho, head of the Financial Statistics Department at the Bank of Korea, explained, "The transportation account surplus aligns with the increased utilization rate of Korean-flagged shipping companies. The cargo loading rate of domestic shipping companies continues to rise, and with the freight index also increasing, the surplus size has grown even larger."

The service account deficit in July was $80 million, with the deficit narrowing by $1.22 billion compared to the same month last year due to improvements in the transportation account. Notably, the transportation account surplus reached $1.59 billion, expanding by $1.59 billion from $10 million in the same month last year, marking the largest surplus ever recorded. The travel account deficit was $490 million, widening by $160 million compared to the $330 million deficit in the same month last year.

Transportation income, centered on maritime cargo transportation income, recorded $4.5 billion. The Shanghai Containerized Freight Index (SCFI) for July rose by 284.5% compared to the same month last year. Lee said, "The SCFI, which was at 3713 in June this year, increased to 4038 in July and 4308 in August, indicating that the freight rate rise is expected to continue for the time being."

The goods account surplus was $5.73 billion, but the surplus narrowed by $1.29 billion compared to the same month last year. This was because the import growth rate exceeded the export growth due to rising raw material prices.

Exports reached $54.31 billion, up $11.32 billion (26.3%) year-on-year, as export growth continued across most items and regions due to the economic recovery of major countries. Imports also increased by $12.6 billion (35.0%) to $48.58 billion compared to the same month last year. Imports of raw materials, capital goods, and consumer goods all increased due to rising raw material prices, continued improvement in facility investment, and expanded durable goods consumption.

Customs-based imports in July increased by 66.1% for raw materials, 16.7% for capital goods, and 20.9% for consumer goods compared to the same month last year.

The financial account, which indicates capital inflows and outflows, showed a net asset increase of $6.56 billion.

With a cumulative current account surplus of $52.55 billion through July and favorable figures expected for the second half of the year, the annual current account surplus forecast of $82 billion is expected to be comfortably achieved. Lee said, "The second half current account forecast is $37.7 billion, and the goods account forecast is $32.8 billion. Simply dividing these by six months means a monthly current account surplus of about $6.5 billion and a goods account surplus of about $5.5 billion. Given the current trend, there should be no major issues in achieving the annual forecast."

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