Current Account Turns Surplus After One Month... Goods Balance Surplus for Two Consecutive Months

Bank of Korea Announces Preliminary Balance of Payments Statistics for May

South Korea's current account recorded a surplus of $1.93 billion in May. This marks a turnaround to surplus just one month after a deficit last month. Although semiconductor exports continue to decline, the strong performance of passenger car exports led to a surplus in the goods balance for two consecutive months, and a reduction in dividend payments to foreigners also turned the primary income balance to surplus.

According to the preliminary balance of payments statistics released by the Bank of Korea on the 7th, the current account surplus in May was $1.93 billion.

South Korea's current account posted deficits for two consecutive months in January and February this year for the first time in 11 years, then barely recorded a surplus of $160 million in March, but immediately turned to a deficit of $790 million in April. In April, concentrated dividend payments to foreigners caused the primary income balance to turn to a deficit, pulling down the overall current account balance.

Looking specifically at the May current account, the goods balance maintained a surplus trend for two consecutive months at $1.82 billion, following $580 million in April. However, this was due to imports decreasing more than exports, and the export decline trend continues.

Exports amounted to $52.75 billion, with passenger cars continuing their strong performance, but exports decreased by $9.06 billion compared to the same month last year, mainly in semiconductors, petroleum products, and chemical products. This marks the ninth consecutive month of decline. Based on customs clearance, passenger cars increased significantly by 52.9%, but semiconductors (-35.6%), petroleum products (-33.0%), steel products (-8.3%), and chemical products (-20.8%) still showed poor performance.

Imports were $50.93 billion, down $7.93 billion compared to the same month last year. Imports of raw materials (-20.3%), capital goods (-5.7%), and consumer goods (-7.8%) all decreased.

The services balance recorded a deficit of $910 million, marking a deficit for one year since May last year. The transportation balance turned to a deficit of $350 million, and the travel balance deficit widened to $820 million compared to -$500 million in April.

The primary income balance, which recorded a deficit in April, returned to a surplus of $1.42 billion. Earlier, the Bank of Korea had forecasted, "In May, dividend payments to foreigners generally decrease, so the primary income balance will post a surplus, and the current account improvement trend will continue in May."

The financial account, which indicates capital inflows and outflows, showed a net asset increase of $2.65 billion. Direct investment saw domestic investors' overseas investment increase by $3.17 billion, continuing the increase for 261 consecutive months, and foreign investment in Korea increased by $1.07 billion, turning to an increase again after one month.

Securities investment showed domestic investors' overseas investment increased by $1.54 billion, and foreign investors' domestic investment increased by $13.5 billion. Foreign investment in Korea reached the highest level since statistics began in January 1980. The Bank of Korea explained, "Demand and supply for domestic bonds both increased, leading to a significant rise in foreign investment in domestic bonds."

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