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(LEAD) S. Korea's current account surplus widens in June, but H1 surplus at 8-year low amid pandemic

Finance 10:03 August 06, 2020

(ATTN: REWRITES headline; UPDATES with more details throughout)
By Kim Soo-yeon

SEOUL, Aug. 6 (Yonhap) -- South Korea's current account surplus hit an eight-month high in June as the pace of export falls slowed amid major countries' economic reopenings following the pandemic-caused lockdowns, central bank data showed Thursday.

But the country logged the smallest current account surplus in eight years in the first half as overseas shipments were hit by the new coronavirus outbreak.

The current account surplus reached US$6.88 billion in June, up from $2.29 billion in May, according to the Bank of Korea (BOK). The current account is the broadest measure of cross-border trade.

It marked the largest surplus since October 2019, when the surplus reached $7.83 billion.

The June tally also marked the second straight month of the surplus after the country logged a $3.33 billion current account deficit in April, the largest in almost a decade on faltering exports amid the COVID-19 pandemic.

But in the January-June period, the current account surplus reached $19.17 billion, the smallest since the first half of 2012, when the surplus hit $9.65 billion.

"As global trade faltered amid lockdowns, South Korea's exports of most items sharply fell in the first half, except for shipments of quarantine-related goods, tech products and medical supplies," Park Yang-su, head of the BOK's economic statistics department, said in a briefing.

The BOK forecast that the country is expected to achieve the central bank's full-year current account surplus target of $570 billion, as exports are recovering. Last year, South Korea logged current account surplus of $60 billion.

"In the second half, South Korea faces uncertainties, including a possible resurgence of the coronavirus, a potentially delayed recovery in major economies, and tensions between the United States and China. But the country's 2020 surplus is likely to meet the BOK's forecast," Park said.

This file photo, taken June 4, 2020, shows the harbor in South Korea's southeastern city of Busan. (Yonhap)

The goods balance posted a surplus of $5.87 billion in June, larger than the $2.5 bill in May.

Exports, which account for half of South Korea's economy, fell 9.3 percent on-year to $40 billion, while imports declined 9.8 percent to $34.2 billion.

South Korea's exports were battered by the fallout of the pandemic this year as it hit supply chains with global lockdowns and social distancing guidelines. The pace of export falls has slowed since June as major economies slowly began to resume business activities.

The service account, which includes outlays by South Koreans on overseas trips, logged a deficit of $1.26 billion in June after posting a shortfall of $480 million in May.

The travel account posted a deficit of $420 million in June, a sharp hike from a shortfall of $160 million in May, as the pandemic continued to disrupt air travel.

The primary income account, which tracks wages of foreign workers and dividend payments overseas, logged a surplus of $1.74 billion in June, wider than a surplus of $540 million in the previous month.

The capital and financial account, which covers cross-border investments, posted a net inflow of $7.15 billion in June, compared with a net inflow of $3.24 billion in May.

sooyeon@yna.co.kr
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