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(2nd LD) Korea's current account surplus surges to 8-month high in June

Economy 10:28 August 06, 2019

(ATTN: UPDATES with remarks from a BOK official, more details, minor changes in paras 8-11, 15-17; ADDS photos)
By Byun Duk-kun

SEOUL, Aug. 6 (Yonhap) -- South Korea's current account surplus reached an eight-month high in June on a goods account surplus and record high returns from foreign investment, central bank data showed Tuesday.

The country's current account surplus came to US$6.38 billion in the month, the highest since October when the country posted a $9.35 billion surplus, according to the preliminary data from the Bank of Korea (BOK).

The reading also marks the second consecutive month of surplus after the country posted its first current account deficit in seven years in April, though largely due to a seasonal factor of increased dividend payouts.

South Korea continued to enjoy a large surplus in its goods account balance, posting a $6.27 billion surplus in June, up from a $5.51 billion surplus the month before, according to the BOK.

The tally, however, marks a sizable drop from a $9.54 billion surplus the same year last year.

The country's exports have been on a steady decline since December, hindered partly by the persisting trade dispute between the world's two largest economies -- the United States and China -- that are also the world's largest importers of South Korean products.

In June, the country's exports plunged 15.9 percent on-year to some $44 billion, while imports fell 11.8 percent to $37.7 billion.

The file photo, taken April 1, 2019, shows export containers being loaded onto a ship at the country's largest import-export port in Busan, 450 kilometers south of Seoul. (Yonhap)

"The surplus in the goods account is continuing to shrink due to a drop in exports caused by the prolonged trade dispute between the U.S. and China, as well as an economic slowdown in China, one of the country's key trade partners," Park Yang-su, head of BOK's economic statistics department, told a press briefing.

However, "the service account balance is continuing to improve since last year, which can be said to be a very positive factor for the economy," he added.

The country's deficit in the service account balance widened to $2.1 billion from a $1.16 billion deficit in May, but the reading marks a drop of $400 million from a $2.42 billion deficit in the same month last year, according to the BOK.

The surplus in the primary income account more than doubled from a month earlier to $2.77 billion in June, the second highest in history, as its gains from foreign investment jumped to a record high of $4.9 billion, with income from dividend payments also reaching a record high of $3.27 billion.

In the first six months of the year, the country's current account surplus came to $21.77 billion, down 24.7 percent from a $28.9 billion surplus posted during the same period of last year, according to the BOK.

Its products account surplus tumbled to $37.06 billion from $52.48 billion over the cited period as exports shrank with a greater speed than imports.

Overall outbound shipments of products tumbled 9.8 percent on-year to $277.7 billion in the first half, while imports slipped 5.7 percent to $240.7 billion.

Park Yang-su, head of the economic statistics department at the Bank of Korea, holds a press briefing at the South Korean central bank in Seoul on Aug. 6, 2019. (Yonhap)

The primary income account posted a surplus of $620 million in the January-June period, marking a sharp turnaround from a $2.91 billion deficit in the same period last year.

"The country had posted a deficit in the primary income account last year, but the account turned to black in the first half of this year on increased income from dividend payments," Park said.

"The surplus in the goods account has narrowed due to worsening external conditions, but the country continued to post a current account surplus on improvements in the service and primary income account balances," he added.

bdk@yna.co.kr
(END)

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