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(2nd LD) S. Korea current account remains in black but shrinks sharply on-year amid slumping exports

09:40 December 09, 2022

(ATTN: RECASTS headline, lead; ADDS more info throughout)

SEOUL, Dec. 9 (Yonhap) -- South Korea posted a current account surplus in the black for the second consecutive month in October, but the amount dwindled sharply from the previous year amid expanded imports, slumping exports and a rise in outbound travel, central bank data showed Friday.

The country's current account surplus came to US$880 million in October, according to the preliminary data from the Bank of Korea (BOK).

This marked the second straight month of a surplus, though the surplus was nearly halved from the previous month's $1.58 billion. It also represented a sharp fall from a year earlier when the country logged a surplus of $8.01 billion.

The decline came as exports slumped amid economic slowdowns in major countries, while imports continued to grow, affected by rising costs of raw materials.

South Korea exported $52.59 billion worth of exports in October, down 6 percent from a year earlier. The decline stemmed in part from a 16.4 percent drop in outbound shipments of semiconductors.

Exports to China, in particular, shrank 15.7 percent on-year in October. Shipments to Japan also dropped 13.1 percent over the same period, while those to Southeast Asian countries fell 11.7 percent.

Soaring inflation, aggressive monetary tightening in major countries and continued zero COVID-19 policy in China appear to have hit South Korean exports hard, with the cyclical downturn of the semiconductor sector adding to woes.

Imports, meanwhile, continued to rise amid high-rise energy costs, jumping 8.5 percent on-year to $54.07 billion in the month. Excluding energy products, imports grew 3.1 percent over the same period.

The goods balance that tracks exports and imports logged a deficit of $1.48 billion in October, swinging back from the previous month's surplus of $470 million. It compared with the previous year's surplus of $6.1 billion.

The service account, which includes outlays by South Koreans on overseas trips and transport earnings, posted a surplus of $50 million in October, a turnaround from a deficit of $340 million a month earlier. It was still smaller than a surplus of $640 million a year earlier.

The on-year decline stemmed from a decline in transport-related surplus and increased outbound trips that led to a deficit of $540 million in the travel sector, one of the major components for the services account.

The primary income account, which tracks wages of foreign workers and dividend payments overseas, logged a surplus of $2.26 billion in October, down from the previous month's surplus of $1.84 billion, according to the data.

During the January-October period, the country's cumulative current account surplus stood at $24.99 billion, sharply down from a surplus of $75.42 billion tallied a year earlier, the data showed.

The BOK earlier forecast this year's current account surplus to amount to $25 billion, sharply down from last year' total surplus of $88.3 billion. The central bank projected the 2023 surplus will be slightly higher than this year at $28 billion.

Containers for exports and imports are stacked at a pier in South Korea's largest port city of Busan on Oct. 11, 2022. South Korea's exports slipped 20.2 percent on-year in the first 10 days of October due mainly to sluggish overseas sales of chips, according to data from the Korea Customs Service. (Yonhap)

kokobj@yna.co.kr
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