Energy Import Value Hits Maximum in 7 Years and 3 Months... Current Account Surplus Margin Decreases (Comprehensive)

Energy Import Value Highest Since August 2014
Goods Trade Surplus Shrinks
Bank of Korea: "Difficult to Judge Whether Annual $92 Billion Target Will Be Achieved"

The Busan Port Sinsundae Pier, piled high with import and export cargo, brightly illuminates the night sky to continue nighttime operations. South Korea surpassed $640 billion in annual export value in 2021, setting a new record high. Since recording its first $100 million in 1964, it exceeded $10 billion in 1977, $100 billion in 1995, $600 billion in 2018, and this year surpassed $640 billion, marking a new milestone in 66 years of trade history.
Busan ? Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Jang Sehee] In November last year, the import value of energy such as crude oil and coal recorded the highest in 7 years and 3 months. Due to the surge in energy prices, the increase in imports exceeded the increase in exports, reducing South Korea's current account surplus by about 2 billion dollars compared to a year earlier.

According to the "November 2021 Balance of Payments (provisional)" announced by the Bank of Korea on the 11th, the import value of crude oil, coal, gas, and petroleum products during this period was 14.54 billion dollars, the highest since August 2014 (+15.34 billion dollars). Accordingly, the current account surplus decreased by 2.02 billion dollars from 9.18 billion dollars a year earlier.

Although exports continued to perform well amid the global economic recovery, the import growth rate outpaced the export growth rate due to the sharp rise in raw material prices. In particular, the goods balance surplus (5.95 billion dollars) decreased by 4 billion dollars compared to a year earlier. Exports (59.65 billion dollars) increased by 27.1%, while imports (53.7 billion dollars) grew by a larger margin of 45.3%.

Lee Seong-ho, head of the Financial Statistics Department at the Bank of Korea, explained, "The surge in energy import values such as crude oil and petroleum products reduced the overall current account surplus." However, the current account recorded a surplus of 7.16 billion dollars, continuing a 19-month streak of surpluses.

Since the recent import growth rate is outpacing the export growth rate, it cannot be ruled out that this may affect the surplus trend. The import growth rate has exceeded the export growth rate for six consecutive months. This is the first time in over two years since the seven consecutive months from April to October 2019.

The service balance recorded a deficit of 140 million dollars. However, compared to the same month last year (-980 million dollars), the deficit narrowed by 840 million dollars. The transportation balance recorded a surplus of 1.71 billion dollars, expanding by 1.26 billion dollars compared to the same month last year (450 million dollars). Transportation income reached 4.49 billion dollars due to the continued rise in export freight rates. The primary income balance showed a surplus of 1.49 billion dollars due to increased dividend income.

The financial account net assets, which indicate capital inflows and outflows, increased by 6.54 billion dollars in November. In direct investment, domestic investors' overseas investments increased by 5.35 billion dollars, while foreign investors' domestic investments decreased by 970 million dollars. In securities investment, domestic investors' overseas securities investments increased by 6.55 billion dollars, and foreign investors' domestic securities investments increased by 2.95 billion dollars.

Regarding the Bank of Korea's current account forecast for this year (92 billion dollars), Lee said, "A surplus of about 7.8 billion dollars needs to be recorded in December," adding, "In the case of the goods balance, it is difficult to judge whether the target will be achieved at this point because it includes overseas production exports, transportation, and insurance in addition to the trade balance."

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