Hidden Drivers Behind the Record-High Current Account Surplus Beyond Semiconductors...Key Variables for This Year [BOK Focus]

"It is now virtually certain that the 115 billion dollar annual forecast by the Bank of Korea will be exceeded"
Structural increase in dividend and interest income from residents' overseas investments
Investment income surplus expected to surpass 30

Last year’s record-high current account surplus is now virtually confirmed. Even before the December figures are released, only 3.3 billion dollars remain to be added to rewrite the all-time record. The hidden driving force behind this record is “money that makes money.” As overseas investments by domestic investors such as so-called “Seohak Ants” (individual investors in foreign stocks), corporations, and the National Pension Service have expanded, dividend and interest income from abroad has structurally increased, thereby contributing to the widening of the current account surplus.

Record-high current account surplus, only 3.3 billion dollars to go...“It will surpass even the Bank of Korea’s 115 billion-dollar forecast”

Confirmation that last year’s current account surplus hit an all-time high is expected to come on the 6th, when the Bank of Korea releases the preliminary balance of payments data for December 2025. The cumulative current account surplus from January to November last year already reached 101.82 billion dollars, meaning that a surplus of just over 3.3 billion dollars in December would be enough to surpass the previous annual record high of 105.12 billion dollars set in 2015. It is also virtually certain that the 115 billion-dollar surplus projected by the Bank of Korea in its November economic outlook will be achieved. To reach that projection, the surplus required in December is 13.18 billion dollars.

The main driver of last year’s record current account surplus was robust semiconductor exports. The goods balance, which reflects income from buying and selling goods, accounts for the largest share of the current account. The goods balance surplus from January to November last year came to 107.02 billion dollars, already exceeding 100 billion dollars. The semiconductor rally led to a sharp increase in the goods balance surplus. On a customs-clearance basis, semiconductor exports last year hit an all-time high for the second consecutive year. Boosted by growing demand for artificial intelligence (AI), they rose 22.2% from the previous year to 173.4 billion dollars, accounting for 24.4% of Korea’s total exports. On the back of this performance, total exports last year increased 3.8% year-on-year to 709.7 billion dollars, rewriting the previous record set in 2024.

The hidden contributor is the investment income balance. Unlike the goods balance, this is “invisible income,” calculated as dividend and interest income from Koreans’ overseas investments minus the income earned by foreigners on their investments in Korea. As domestic overseas investment in stocks and bonds has increased, the investment income balance has been structurally trending upward. Residents’ overseas securities investment from January to November last year totaled 129.4 billion dollars, a surge of 79.2% from a year earlier. As a result, the investment income surplus during the same period expanded to 29.4068 billion dollars. Including December, the annual figure is believed to have exceeded 30 billion dollars. The share of the investment income balance in the current account surplus rose from 4.6% in 2025 to 28.9% in the January–November period of last year.

Semiconductors are the biggest variable this year...Volatility in the goods balance and how much the investment income balance can offset it will be key

Semiconductors remain the key variable this year as well. Analysts expect the structure in which strong semiconductor exports, driven by increased AI-related investment, support the current account surplus to continue. However, as tariff risks have resurfaced and other uncertainties remain, the performance of the goods balance could diverge depending on how these risk factors unfold.

According to the Ministry of Trade, Industry and Energy, exports on a customs-clearance basis last month reached 65.85 billion dollars, surpassing 60 billion dollars in January for the first time. Of this, semiconductor exports amounted to 20.5 billion dollars, up 103% from a year earlier. However, renewed trade uncertainty is a source of concern, including the 25% tariff on semiconductors that U.S. President Donald Trump put on the table last month as he pressed for the passage of the Strategic Investment in America Act. Despite a series of back-to-back meetings between U.S. officials and Korean government authorities, the lack of tangible progress is heightening anxiety.

When volatility in the goods balance increases due to a deterioration in the trade environment and other factors, another key question will be how much the investment income balance, which has grown to about 30% of the size of the goods balance, can cushion the impact. Factors such as adjustments in the National Pension Service’s share of overseas investments and the effects of a strong won exchange rate will influence this year’s trend of expanding overseas securities investment. Even so, many expect little change in the broader pattern of structural growth in the investment income balance, which is being driven by the cumulative build-up of overseas assets. The Bank of Korea expects this year’s current account surplus to once again exceed last year’s record level. Its projection for this year is a surplus of 130 billion dollars.

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