September Current Account Surplus Hits Two-Year High... Surpasses 10 Billion USD (Update)

A container ship is unloading at Gammam Pier in Busan Port.
[Photo by Yonhap News]

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[Asia Economy Reporter Kim Eunbyeol] With exports turning to an upward trend in September, the current account surplus exceeded $10 billion for the first time in two years. It recorded a surplus for five consecutive months, and in September, the increase in exports was greater than that of imports, dispelling concerns about a 'recession-type surplus.'

According to the 'September 2020 Balance of Payments (provisional)' released by the Bank of Korea on the 5th, the current account surplus in September reached $10.21 billion. After recording a deficit in April, the current account has maintained a surplus streak for five consecutive months since May. The September current account surplus exceeded $10 billion for the first time in two years since September 2018 ($11.24 billion). This means the surplus was larger than before the COVID-19 pandemic.

The cumulative current account surplus from January to September was $43.4 billion, marking an increase compared to the same period last year. Even considering that exports declined again in October, the Bank of Korea's annual current account forecast of $54 billion is expected to be comfortably achieved.

Exports in September amounted to $49.85 billion, marking an increase compared to the same month last year for the first time in seven months since February. Exports increased mainly in semiconductors, chemical products, and passenger cars. Park Dongjun, head of the International Balance of Payments Team at the Bank of Korea's Economic Statistics Bureau, said, "Although semiconductor prices fell, the volume compensated, resulting in semiconductor exports increasing by more than 10% compared to the same period last year," adding, "Considering that Chuseok was in October, it shows a clear recovery compared to last year."

Imports also increased by 1.0% compared to the same month last year, reaching $37.83 billion. Despite weak energy prices, capital goods and consumer goods increased, centered on semiconductor manufacturing equipment and passenger cars. As a result, the goods balance recorded a surplus of $12.02 billion, expanding the surplus by $3.32 billion compared to the same month last year.

The services balance recorded a deficit of $2.04 billion, reducing the deficit by $220 million compared to the same month last year (-$2.26 billion). The sharp decline in overseas departures due to the COVID-19 pandemic has contributed to reducing the services balance deficit. Increased income from maritime and air cargo transportation also helped reduce the services balance deficit.

The primary income balance recorded a surplus of $610 million, with the surplus decreasing by $930 million compared to the same month last year. This was due to a decrease in dividend income from overseas direct investment corporations and an increase in dividend payments by foreign direct investment corporations.

Meanwhile, domestic investors continued their overseas stock investments. In September, domestic investors' overseas stock investment amounted to $2.28 billion, marking an increase for 55 consecutive months since March 2016. Including bonds, domestic investors' overseas securities investment was $3.02 billion, increasing for six consecutive months.

Foreign investors' domestic stock investment decreased for two consecutive months (-$2.29 billion). Foreign investors' domestic bond investment was $3.83 billion, increasing for nine consecutive months since January this year.

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