Lee Yu-sup and Cho Jeehyun
South Korea’s December current account surplus shriveled to its smallest in eight months as exports weakened on reduced memory chip demand, raising concerns about a snap in the surplus streak that extended to the 21st year in 2018.
According to preliminary balance of payments data released by the Bank of Korea on Friday, the nation’s current account surplus narrowed to $4.82 billion in December from $5.22 billion in November. It kept its surplus streak since May 2012, but the surplus was the smallest since April last year.
The surplus in goods account stopped at $6.53 billion, the lowest since February last year, as exports shriveled to $49.57 billion in December from $51.72 billion a month earlier and marked its first on-year fall (1.4 percent) in three months.
The bank said it was primarily due to a fall in per-unit export price for mainstay items such as memory chip and petroleum products as well as reduced shipments to China. Given that the working days were shorter in September from Chuseok holidays, it is the first time for the commodities exports to mark an on-year fall since October 2016, the bank added. Imports, however, grew 1.6 percent to $43.04 billion in December from a year earlier.
Service account deficit in December was reduced to $1.95 billion, the smallest since December 2016, on improvement in transportation sector.
For full 2018, the country’s current account surplus totaled $76.41 billion, up from previous year’s $75.23 billion. It has kept up its longest-ever surplus steak since 1998. This was largely driven by commodities trade, the bank noted. Exports grew 7.8 percent from the previous year to a record high of $625.44 billion in 2018. Imports also expanded 10.0 percent on year to $513.57 billion.
Deficit in service account stretched to $29.74 billion won in 2018 and marked the second highest-ever record. Travel account deficit reached $16.65 billion, also the second largest. The number of Chinese visitors who stayed away from Korea in 2017 due to diplomatic issues related to U.S anti-missile system THAAD has not fully recovered, the bank said.
Transportation account also remained in red, logging the second highest deficit of $4.37 billion.
In the financial account, net assets expanded by $70.49 billion last year. Koreans’ overseas investment grew by an all-time high of $38.92 billion, while those by foreign investors in Korea also were up by $14.48 billion, the second largest-ever. As for securities investment, Koreans’ offshore investment gained by $64.99 billion and foreigners’ investment in Korean securities grew by $21.11 billion.