In January, the current account surplus recorded its lowest level in nine months. The decline in working days affected exports, leading to a decrease in exports centered on petroleum products and automobiles. This marks the first decrease in exports in 1 year and 4 months since September 2023.
The current account is a statistic that sums up the exports and imports of goods and services between countries, along with all economic transactions, such as capital and labor. It is an indicator of a country's fundamental strength, primarily composed of the merchandise account, service account, primary income account, and transfer account.
According to the 'balance of payments (provisional)' released by the Bank of Korea on the 7th, the current account in January recorded a surplus of $2.94 billion. Although it continued to remain in surplus for 21 consecutive months, the scale was the smallest since April of last year ($1.49 billion). Compared to December of last year ($12.37 billion), it decreased by nearly $10 billion.
The main reason for the reduced surplus is the decrease in the merchandise account surplus (exports - imports). The merchandise account surplus in January totaled $2.5 billion, which is one-fourth of the level in December of last year ($10.43 billion). Compared to a year ago ($4.36 billion), it is down by $1.86 billion.
Exports were recorded at $49.81 billion, down 9.1% from a year earlier, marking a decline for the first time in 1 year and 4 months since September 2023 ($-890 million). The growth rate of semiconductor exports (customs clearance basis) slowed from 30.6% in December of last year to 7.2% in January, while exports of other items such as automobiles (-19.2%) and petroleum products (-29.2%) declined.
Imports have decreased for four consecutive months. January imports recorded $47.31 billion, a 6.2% decline from a year earlier. While capital goods (+0.9%) increased, raw materials (-9.8%) and consumer goods (-10.3%) decreased. By item, transportation equipment (+24.9%), semiconductors (+8.3%), semiconductor manufacturing equipment (+2.0%), minerals (+2.7%), and non-ferrous metals (+2.6%) increased, but most other items, including coal (-35.5%), grains (-22.7%), and home appliances (-20.4%), decreased.
The service account, which includes transactions related to travel, transportation, and intellectual property royalties, recorded a deficit of $2.06 billion. Due to the impact of the long holiday during the Lunar New Year, the travel account deficit grew wider (-$950 million to -$1.68 billion), while the surplus in the transportation account expanded ($190 million to $560 million) due to a decrease in shipping fees.
The primary income account, reflecting the flow of wages, dividends, and interest, showed a surplus of $2.62 billion; however, the surplus narrowed by $2.14 billion compared to the previous month ($4.76 billion). The sharp decrease in the dividend income account surplus from $3.59 billion to $1.9 billion caused this. The interest income account also declined from $1.29 billion during the same period to $880 million.
The transfer account showed a deficit of $120 million. Although the deficit narrowed by $490 million compared to the previous month (-$710 million), it expanded by $20 million compared to a year ago (-$14 million). The transfer account represents the difference in unconditional assistance or remittances between residents and non-residents.
The net worth in the financial account, which indicates capital inflows and outflows, increased by $3.72 billion. Direct investments decreased by $2.17 billion. Domestic entities' overseas direct investment fell by $940 million, while foreign investments in the domestic market increased by $1.23 billion. In terms of securities investment, domestic entities' investments abroad increased by $12.55 billion, while foreign investments in the domestic market decreased by $290 million.