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(3rd LD) S. Korea's current account surplus halved on-year in December amid soaring imports

Economy 10:06 February 10, 2022

(ATTN: ADDS BOK official's comments in paras 5-6)

SEOUL, Feb. 10 (Yonhap) -- South Korea's current account surplus was halved in December from a year earlier as imports grew at a much faster pace than exports amid higher energy and raw material prices, central bank data showed Thursday.

The current account surplus amounted to US$6.06 billion in December, compared with a surplus of $12.06 billion a year earlier, according to the preliminary data by the Bank of Korea (BOK). The current account is the broadest measure of cross-border trade.

The December figure was also smaller than the previous month's surplus of $6.82 billion though it remained in the black for the 20th straight month.

For the whole of 2021, the country's current account surplus reached $88.3 billion, which was higher than the previous year's $75.9 billion. The amount still fell short of the BOK's surplus forecast of $92 billion.

"Last year's surplus was about $3.7 billion short of our prediction, and it was due to a larger-than-expected decline in the amount of the goods balance surplus caused by rising raw material prices and surging import growth since the fourth quarter," Hwang San-pil, a senior BOK official, said in an online press briefing.

He cited the persistent spread of the coronavirus at home and abroad, global supply disruptions, volatility of raw material prices and uncertainty over China's economy as potential risks that could weigh on this year's current account.

The Jan. 11, 2022, file photo shows a ship full of containers departing South Korea's largest port city of Busan. According to customs authorities, the country's outbound shipments registered US$13.9 billion during the first 10 days of the year, up 24.4 percent on-year. (Yonhap)

The data showed that imports came to $57.95 billion in December, higher than $41.93 billion a year earlier. For 2021, imports totaled $573.81 billion, compared with the previous year's $437.3 billion.

In particular, imports of raw materials jumped 63.8 percent on-year in December, with crude oil prices soaring 86.2 percent over the same period.

Exports in December were tallied at $62.43 billion, up from the previous year's $52.53 billion, with annual overseas shipments growing to $650.01 billion from $517.91 billion in 2020.

Despite robust exports growth, the goods balance measuring inbound and outbound shipments saw its surplus shrink to $4.48 billion in December from the previous year's surplus of $10.6 billion, the data showed. The annual surplus also declined from $80.6 billion to $76.2 billion.

The service account, which includes outlays by South Koreans on overseas trips, posted a deficit of $240 million in December, compared with a deficit of $440 million a year earlier. For 2021, the deficit narrowed to $3.11 billion from the 2020 deficit of $14.67 billion.

The smaller service account deficit was due in part to rising freight fees and increased air cargo shipments amid rebounding demand following the pandemic-caused slowdown.

The primary income account, which tracks wages of foreign workers and dividend payments overseas, logged a surplus of $2.47 billion in December, slightly down from a surplus of $2.59 billion in the previous year.

The decline was caused by less dividend income and more dividend payouts to foreign investors.

The capital and financial account, which covers cross-border investments, posted a net inflow of $7.23 billion in December, smaller than a net inflow of $8.88 billion a year earlier, the data showed.


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