Surge in Semiconductor Exports... Current Account Surplus for 9 Consecutive Months (Comprehensive)

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Thanks to improvements in semiconductor exports, South Korea's current account surplus continued for the ninth consecutive month in January. With the semiconductor export boom continuing, the current account is expected to maintain its surplus trend in February as well.

According to the preliminary balance of payments statistics released by the Bank of Korea on the 8th, South Korea's current account surplus in January recorded $3.05 billion. Although the surplus amount decreased due to seasonal factors compared to the $7.41 billion recorded in the previous month, the current account has maintained a surplus for nine consecutive months since May last year.

The current account surplus was driven by exports. January exports amounted to $55.22 billion, a 14.7% increase compared to the same month last year. This is the largest increase since May 2022. Exports have been on the rise for four consecutive months after rebounding in October last year for the first time in 14 months.

Export containers are loaded onto a ship at Busan North Port. Photo by Kang Jin-hyung aymsdream@

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In January, semiconductor exports led the export improvement with a 52.8% increase compared to the previous year. The growth rate of semiconductor exports in January was the largest in about six years since December 2017. Song Jae-chang, head of the Financial Statistics Department at the Bank of Korea, said, "The recovery in semiconductor exports, centered on high-performance memory semiconductors for servers, has been gaining momentum since the second half of last year," adding, "Semiconductor prices have also continued to rise, showing an overall recovery in the market sentiment."

Passenger car exports also increased by 24.8%, continuing the improvement trend, while machinery exports rose by 16.9% and petroleum products by 12%.

January imports amounted to $50.98 billion, down 8.1% compared to the same month last year. Due to the decline in energy prices, raw material imports decreased by 11.3% compared to the same month last year. Among raw materials, the decrease rates for gas, chemical products, and coal were 42.3%, 16.3%, and 8.2%, respectively. However, imports of crude oil (+6.0%) and petroleum products (+24.2%) increased.

With exports rising and imports falling, the goods balance surplus in January was $4.24 billion, continuing a 10-month streak of surpluses since April last year. This marks a significant improvement compared to the $7.35 billion deficit recorded in the same month last year.

The Bank of Korea expects the goods balance and current account surplus to continue in February following the improvement in export conditions. Director Song stated, "We understand that the trade balance surplus based on customs clearance in February has expanded by nearly $4 billion compared to January," and added, "We expect the current account surplus to increase in February."

By region, exports to the United States (+27.1%) and Southeast Asia (+24.4%) have expanded, and exports to China (+16%) and the EU (+5.2%) have turned to growth. It is analyzed that exports to China have shifted to an increasing trend as the semiconductor industry improves.

However, there is also an assessment that China's influence on South Korea's exports has diminished compared to before. Park Woong-yong, a professor in the Department of Economics at Seoul National University, said, "With changes in the economic structure, even if China implements stimulus measures, exports to China are unlikely to increase significantly as in the past," adding, "China no longer requires many intermediate goods from South Korea, and many companies that had entered Korea have now relocated to other countries like Vietnam."

The duty-free area of Incheon International Airport Terminal 1 is bustling with travelers. Photo by Kang Jin-hyung aymsdream@

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Unlike the goods balance, the service account recorded a deficit of $2.66 billion. The deficit widened compared to December last year (-$2.54 billion). The travel account deficit reached $1.47 billion due to an increase in outbound travelers, and the intellectual property rights account also recorded a deficit of $520 million.

The primary income account showed a surplus of $1.62 billion, mainly from dividend income. However, the surplus narrowed compared to the previous month ($2.46 billion) as dividend income from overseas subsidiaries of domestic companies decreased. The secondary income account recorded a deficit of $150 million.

The net financial account, which is assets minus liabilities, increased by $2.81 billion, but the increase was smaller compared to the previous month ($5.68 billion). In direct investment, domestic investors' overseas investment increased by $2.16 billion, and foreign investors' domestic investment increased by $220 million. In securities investment, domestic investors' overseas investment increased by $6.51 billion, mainly in stocks, while foreign investors' domestic investment increased by $6.52 billion, mainly in bonds.

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