South Korea reported its largest current account surplus in close to seven years in June amid strong exports of semiconductors and other major products, according to the Bank of Korea (BOK).
Preliminary data from the central bank reveals that South Korea posted a surplus of $12.26 billion in June, exceeding May’s $8.92 billion surplus, which was the largest since September 2017.
As a result, South Korea’s cumulative current account surplus for the first six months of 2024 reached $37.73 billion, a significant increase from the $1.15 billion surplus set during the first half of 2023. The January-June surplus exceeded the Bank of Korea’s estimate of $27.9 billion.
Looking ahead, the central bank projects that the surplus for the second half of the year will reach $32.1 billion and that the annual surplus will surpass $60 billion.
Positive trade balance supports growth
The higher-than-expected current account surplus is attributed to South Korea’s positive trade balance since April 2023. The trade surplus for goods reached $11.47 billion in June, a notable increase from $8.75 billion in May. In June, exports increased by 8.7 percent annually to $58.82 billion while imports declined 5.7 percent to $47.35 billion.
As of June, exports have continued to rise for the ninth consecutive month driven by a surge in demand for semiconductors, mobile devices, petroleum products and other items. Outbound shipments of semiconductors surged by 50.4 percent annually while mobile devices and petroleum products exports rose 26 percent and 8.5 percent, respectively.
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Service account deficit expands
Amid the surge in South Korea’s current account surplus, the country’s service account deficit amounted to $1.62 billion in June, rising from a $1.29 billion deficit in May. The central bank attributed the larger deficit to a travel deficit driven by pent-up demand for overseas tourism.
The country’s primary income account, which includes monthly salaries and investment income, reached a surplus of $2.69 billion driven by increased dividend income from overseas. The dividend income account posted a surplus of $2.34 billion in June, up from $1.13 billion in May.
Meanwhile, South Korea’s financial account saw a net outflow of $12.24 billion in June. In addition, overseas direct investments by domestic residents increased by $4.89 billion, while foreign direct investments declined by $370 million.
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