S.Korea posts 2nd current account deficit in 3 months due to flat exports
Mi-Hyun Jo
Jan 11, 2023 (Gmt+09:00)
South Korea in November last year suffered its second current account deficit in three months due to plummeting exports of key items like semiconductors. 2022 is expected to see a surplus for the year thanks to its first-half performance but at a much smaller amount from 2021.
Experts predict that even if the current account finishes in the black this year, it will be a "recession-type surplus" dependent on an import decline due to the global economic slowdown.
The Bank of Korea on Tuesday said the current account balance in November last year finished $620 million dollars (769.4 billion won) in the red, a sharp drop of $7.4 billion from the same month in 2021. The fall was to the nosedive in the goods balance, which saw a deficit of $1.5 billion, a decline of $7.6 billion, as exports plummeted while imports increased.
Exports fell 12.3% to $52.3 billion over the same period, the biggest fall in two in 2.5 years since 28.7% in May 2020 during the COVID-19 pandemic and the third consecutive month of decrease since September last year.
Most leading export items saw minus growth, with semiconductors falling 28.6%, industrial chemical products 16% and steel products 11.3%. Those that saw rises included passenger vehicles with 3%, automotive parts 1% and petroleum products 22.1%.
By region, exports to major regions saw declines like those to China with 25.5%, Southeast Asia 20.7%, Latin America 19.2% and Japan 17.8%.
Though shipments to the US rose 8% and those to the European Union 0.1%, the growth rate failed to reach double digits.
Imports in November last year rose 0.6% to $53.8 billion for the 23rd consecutive month due to more purchases of raw materials and grain. The service balance finished $340 million in the red, down $70 million due to the drop in export freight charges reducing the surplus in transportation.
The cumulative current account surplus last year from January to November was an estimated $24.3 billion, or under 30% of that in the same period last year of $82.2 billion.