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S. Korea’s H1 current account surplus narrows to 8-year low

BOK still hopeful of trade surplus reaching its annual goal of $57b

South Korea saw its current account surplus narrow to an eight-year low in the first half of the year, with the coronavirus pandemic dealing a blow to the global trading system, data from the central bank showed Thursday.

The current account surplus for the January-June period came to $19.17 billion, marking the smallest figure since the same period in 2012, the Bank of Korea said. The surplus came to $9.65 billion at the time.

The current account surplus measures an economy’s imports and exports of goods and services, and the figures indicate whether it can be a net lender to other global nations.

The export-reliant economy’s outbound shipments of most items sharply dropped in the first six-month period, according to Park Yang-su, head of the BOK’s economic statistics department. Only quarantine-related, tech and medical products stood out as exceptions.

Exports for the first half of 2020 dropped 13.1 percent on-year to $241.93 billion with a contraction in outbound shipments of petroleum products, automobiles and auto parts. Imports also shed 9.8 percent to $217.94 billion in the same period.

The service account came to $8.41 billion in deficit, while the travel account posted $3.1 billion in the red in the cited period.

But in June, the current account surplus came to $6.88 billion on-month, marking the largest surplus since October 2019, when the figure stood at $7.83 billion. The corresponding figure for May came to $2.29 billion in surplus, following a $3.33 billion deficit the previous month, apparently hit hard by the COVID-19 pandemic.

The BOK noted a slowdown in downward momentum in exports and said Korea is projected to meet the central bank’s 2020 current account surplus forecast and goal of $57 billion. Korea saw a current account surplus of $60 billion last year.

“In the second half of the year, South Korea faces a slew of risks, including a possible resurgence of the coronavirus, a potentially delayed recovery in major economies, and tensions between the US and China ... but we have put our anxieties behind,” Park said.

“We believe we could achieve the initial goal of $57 billion,” he added.

By Jung Min-kyung (