September Current Account Balance $1.61 Billion... 'Struggling Surplus Turnaround'

Exports Decline for the First Time in 23 Months

[Asia Economy Reporter Seo So-jeong] The current account balance in September returned to a surplus after a month, supported by a surplus in the goods balance. However, due to rising international raw material prices and sluggish exports to China, as well as a significant expansion in the trade deficit last month, the current account balance for October may turn to a deficit.

According to the "September Balance of Payments (provisional)" released by the Bank of Korea on the 8th, the domestic current account recorded a surplus of $1.61 billion. However, compared to the same month last year, the surplus shrank sharply by $8.89 billion.

The current account maintained a surplus for 23 consecutive months from May 2020 to March this year, then posted a deficit of $79 million in April, followed by an increase in surplus to $3.86 billion in May and $5.61 billion in June. However, the surplus sharply decreased to $790 million in July, and then turned to a deficit in August (-$3.05 billion) due to an expanded trade deficit. The cumulative current account surplus from January to September this year was $24.14 billion, a decrease of $43.27 billion compared to the same period last year.

By detailed items, the goods balance returned to a surplus of $490 million after three months, contributing to the turnaround of the current account surplus. However, compared to the same month last year, the surplus decreased sharply by $9.06 billion. During this period, exports amounted to $57.09 billion, down by $42 million (0.7%) year-on-year. This marks the first decline in exports in 23 months since October 2020 (-3.5%). Customs-cleared exports continued to increase mainly in petroleum products and passenger cars but slightly decreased due to a slowdown in net re-export trade.

On the other hand, imports ($56.59 billion) increased by $8.63 billion (18%) compared to a year ago. With increased imports of raw materials and expansion in capital goods and consumer goods, imports have shown a year-on-year increase for 21 consecutive months.

The services balance recorded a deficit of $340 million for the second consecutive month as the surplus in transportation balance shrank. The deficit widened by $280 million compared to the same month last year. Hwang Sang-pil, Director of Economic Statistics Bureau at the Bank of Korea, said, "It is difficult to predict the current account balance for October at this point," adding, "Given the high external uncertainties, the current account flow is expected to remain highly volatile for the time being."

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