Last Year, Record High Current Account Surplus with the US and Southeast Asia... Increased Deficits with Japan and the Middle East

The Bank of Korea's '2021 Regional Balance of Payments (Provisional)'

(Data provided by Bank of Korea)

Last year, the current account surplus with the United States reached a record high due to strong semiconductor exports. The current account surplus with China also expanded for the first time in three years, and Southeast Asia recorded the largest ever current account surplus as both goods and services balances increased. On the other hand, the current account deficits with Japan and the Middle East grew larger.

According to the "2021 Regional Balance of Payments (Provisional)" released by the Bank of Korea on the 24th, the current account surplus with the United States expanded from $32.8 billion in 2020 to $44.96 billion last year. The Bank of Korea explained, "The goods balance surplus widened due to increased exports of semiconductors, and the services balance deficit narrowed due to improvements in the transportation balance."

The current account surplus with China grew from $17.25 billion to $23.61 billion during the same period. This marks the first expansion in the surplus in three years since 2018. Although the goods balance surplus only slightly increased due to higher imports of chemical products, the services and primary income balances improved significantly thanks to a strong transportation balance and increased dividend income, respectively.

In particular, the current account surplus with Southeast Asia surged from $79.2 billion to $102.05 billion, marking the largest scale ever recorded. The goods balance surplus expanded to the second-largest ever due to increased exports of semiconductors, while the services and primary income balances also saw larger surpluses due to improvements in the transportation balance and increased dividend income.

The current account balance with the European Union (EU) turned from a $5.9 billion deficit to a $1.27 billion surplus last year. The Bank of Korea analyzed, "Although the services and primary income balances were weak, the goods balance surplus expanded thanks to strong exports of chemical products, ships, and passenger cars."

Conversely, the current account deficit with Japan widened from $20.22 billion to $22.14 billion. Increased imports of semiconductor manufacturing equipment and higher dividend payments by local subsidiaries led to larger deficits in the goods and primary income balances.

The current account deficit with the Middle East expanded from $28.26 billion to $48 billion. Rising international oil prices increased the import burden of crude oil and petroleum products, affecting the goods balance. The current account with Latin America shifted from a $440 million deficit to a $290 million surplus.

Overseas direct investment by Korean nationals reached $60.82 billion last year, with a significant increase compared to the previous year ($34.83 billion), mainly focused on the United States, Southeast Asia, and the EU. Foreign direct investment in Korea amounted to $16.82 billion, increasing mainly in the EU, the United States, and Southeast Asia. Foreign investment in domestic securities also rose sharply to $58.81 billion from $17.16 billion the previous year.

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