7 Consecutive Months of Current Account Surplus... Export Growth Lifts the Stigma of 'Recession-Type Surplus'

Current Account Surplus of $4.06 Billion in November Last Year
Exports Increase and Imports Decrease for Two Consecutive Months

In November last year, the current account recorded a surplus of $4.06 billion, continuing a seven-month streak of surpluses, and the cumulative current account surplus from January surpassed that of the same period the previous year.

According to the preliminary balance of payments statistics released by the Bank of Korea on the 9th, the current account recorded a surplus of $4.06 billion in November last year.

The current account showed a surplus for seven consecutive months through November, following surpluses in May (+$1.93 billion), June (+$5.87 billion), July (+$3.74 billion), August (+$4.98 billion), September (+$5.42 billion), and October (+$6.8 billion). The surplus amount expanded for three consecutive months after July but decreased in November.

The cumulative current account surplus from January to November was preliminarily estimated at $27.43 billion, an increase of about $280 million compared to the same period in 2022 ($27.15 billion).

By category, the goods balance showed a surplus of $7.01 billion, maintaining a surplus since April. The surplus also increased compared to the previous month ($5.35 billion).

Exports amounted to $56.45 billion, increasing by 7.0% year-on-year in November, following an increase in October last year. Exports had increased in October last year for the first time in 14 months. In November, exports increased and imports decreased, similar to October, shedding the stigma of a "recession-type surplus."

The Bank of Korea explained, "Exports increased for two consecutive months due to the recovery of the semiconductor market and the easing of sluggish exports to China."

Looking at customs clearance exports in November by item, passenger cars increased by 22.9%, semiconductors by 10.8%, and chemical products by 2.6% compared to the same month last year, while petroleum products (-4.5%) and steel products (-8.2%) decreased, resulting in an overall increase. By region, exports to the United States increased by 24.7%, Southeast Asia by 11.7%, Japan by 11.4%, and the European Union (EU) by 3.6%, while exports to China decreased by 0.2%.

Imports amounted to $49.45 billion, down 8% year-on-year. The Bank of Korea explained that the decline in raw materials (-13.2%) continued due to energy prices, and the decreases in capital goods (-11.7%) and consumer goods (-6.2%) widened.

Source=Bank of Korea

The services balance recorded a deficit of $2.13 billion, centered on travel, other business services, and processing services. The deficit widened compared to the previous month (-$1.25 billion). The travel balance (-$1.28 billion) saw a doubling of the deficit due to a decrease in travel income caused by fewer tourists from Southeast Asia and China, while travel payments increased due to a rise in outbound travelers. Meanwhile, the intellectual property rights balance turned to a surplus ($240 million) as domestic companies' income from patent royalties received from overseas subsidiaries increased.

The primary income balance turned to a deficit of $150 million as dividend income decreased while quarterly dividend payments increased significantly.

The secondary income balance recorded a deficit of $660 million.

The net financial account assets (assets minus liabilities) increased by $2.02 billion in November, significantly narrowing the increase compared to the previous month ($8.37 billion).

In direct investment, domestic investors' overseas investments increased by $4.71 billion, mainly in the secondary battery sector, and foreign investors' domestic investments increased by $1.36 billion, resulting in a net asset increase of $3.36 billion.

In securities investment, domestic investors' overseas investments increased by $3.99 billion, and foreign investors' domestic investments increased by $6.19 billion due to expectations of semiconductor industry improvement and easing concerns over prolonged global high interest rates, resulting in a net asset decrease of $2.21 billion.

[Image source=Yonhap News]

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