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(2nd LD) Korea's current account surplus narrows sharply in Jan.

Economy 11:01 March 05, 2020

(ATTN: UPDATES with remarks from a BOK official in last 6 paras)
By Byun Duk-kun

SEOUL, March 5 (Yonhap) -- South Korea's current account surplus narrowed sharply in January on shrinking exports, central bank data showed Thursday.

The country's current account surplus came to US$1.01 billion in the month, compared with a surplus of $4.33 billion the previous month and a $3.3 billion surplus the same month last year, according to the data from the Bank of Korea (BOK).

The drop was largely attributed to a dip in South Korea's goods account surplus, which shrank to $1.93 billion in January from $5.03 billion a month before.

Its exports, on a customs clearance basis, plunged 12.3 percent on-year to $43.44 billion, while imports slipped 5.2 percent to $41.52 billion.

This file photo, taken Dec. 1, 2019, shows stacks of export-import containers at South Korea's largest port in Busan, 450 kilometers south of Seoul. (Yonhap)

South Korea's exports had dropped for 14 consecutive months before posting a 4.5 percent on-year increase last month, due to an extended slump in chip prices and reduced shipments to China, the country's top trading partner.

The sharp drop in exports was in part attributed to reduced working days because of the Lunar New Year holiday that fell on Jan. 25.

The country continued to post a deficit in its service account, but the shortfall decreased sharply to $2.48 billion from $3.53 billion a year earlier on the back of an improvement in the travel account, the BOK said.

In January, the country's travel account deficit came to $1.33 billion, compared with a $1.53 billion deficit the same month last year.

This improvement came on a steady increase in the number of foreign visitors to South Korea, which jumped 15.2 percent on-year to 1.27 million in the month, while the number of South Koreans heading overseas plunged 13.7 percent to about 2.51 million.

The drop in the number of South Korean travelers was largely attributed to a 59.4 percent plunge in the number of South Koreans traveling to Japan in a boycott prompted last year by Japan's export restrictions against South Korea.

South Korea's intellectual property account deficit narrowed to $290 million in January from $490 million a year earlier, with its intellectual property account income growing to $590 million from $469 million over the cited period, according to the BOK.

Its primary income surplus came to $1.69 billion, shrinking from a $2.68 billion surplus the month before.

January marked the ninth consecutive month of surplus in South Korea's current account balance.

However, it came amid growing concerns over the economic fallout from the spread of the new coronavirus both here and in major destinations for South Korean exports, including China.

A BOK official said it was too early to determine the exact impact of the virus outbreak on the local economy but noted its current account balance may again post a surplus in February on increased exports.

"Based on the past cases of SARS and MERS, the negative impact from a virus outbreak on the goods account and service account balances appears to be limited, while there exists the possibility of improvement in the case of the tourism account because of a drop in tourism payments," the official told reporters while speaking on condition of anonymity.

"While the country's customs-clearance based goods account surplus narrowed from a year earlier in January because the Lunar New Year holiday fell in January instead of February as usual, its goods account surplus rose in February to $4.12 billion from $2.83 billion last year," the official added.

South Korea has so far reported over 5,700 confirmed cases of COVID-19 with 35 deaths. Its first case came on Jan. 20.

bdk@yna.co.kr
(END)

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