March Current Account Surplus of $270 Million... Surplus Reversal After Three Months (Update)

In March of this year, the current account balance narrowly escaped the deficit trap by recording a surplus of $270 million, thanks to dividend income. However, the surplus margin significantly shrank compared to the same month last year due to sluggish semiconductor exports amid the global economic slowdown.

According to the preliminary balance of payments data for March released by the Bank of Korea on the 10th, the domestic current account recorded a surplus of $270 million. This is a decrease of $6.5 billion compared to a surplus of $6.77 billion one year ago.

The goods balance shifted from a surplus of $5.57 billion in the same month last year to a deficit of $1.13 billion.

The current account turned to a deficit in August last year (-$2.9121 billion), then recorded a surplus of $2.089 billion in September. It maintained a surplus for two consecutive months with $1.6297 billion in October, avoiding a deficit, but returned to a deficit (-$222.8 million) in November before switching back to a surplus in December. In January this year, it recorded the largest deficit since statistics began in 1980, with a deficit of $4.21 billion, turning back to a deficit, and recorded a deficit again in February.

The total current account for the first quarter (January to March) recorded a deficit of $4.46 billion. Compared to one year ago ($14.88 billion), the current account sharply decreased by $19.34 billion.

By detailed item, the goods balance showed a deficit for six consecutive months. It turned to a deficit with a decrease of $6.69 billion compared to the same month last year.

Exports amounted to $56.42 billion, down $8.16 billion (12.6%) from the same month last year. Exports have declined for seven consecutive months due to the global economic slowdown affecting semiconductors, chemical products, and petroleum products.

In particular, semiconductors (customs basis -33.8%), chemical products (-17.3%), petroleum products (-16.6%), and steel products (-10.8%) showed weakness. By region, exports to China (-33.4%), Southeast Asia (-23.5%), and Japan (-12.2%) contracted.

Imports were $57.52 billion, down $1.47 billion (2.5%) from the same month last year. Imports of raw materials, capital goods, and consumer goods all decreased.

The services balance recorded a deficit of $1.9 billion. The services balance turned to a deficit with a decrease of $2.08 billion compared to the same month last year. The transportation balance also recorded a deficit of $20 million, turning to a deficit with a decrease of $1.37 billion compared to the same month last year.

The primary income balance recorded a surplus of $3.65 billion, increasing the surplus margin by $2.61 billion compared to the same month last year. Among the primary income balance, the dividend income balance surplus ($3.15 billion) increased by $2.86 billion over one year.

The net financial account, which is assets minus liabilities, decreased by $138 million. In direct investment, domestic investors' overseas investment increased by $4.52 billion, and foreign investors' domestic investment increased by $2.64 billion.

In securities investment, domestic investors' overseas investment increased by $3.02 billion, but foreign investors' domestic investment decreased by $3.33 billion.

[Image source=Yonhap News]

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