In February, the current account recorded a surplus of nearly $7.2 billion, continuing a surplus for 22 consecutive months. This marks the third-longest surplus streak since the 2000s, and the surplus amount is the third-largest ever for February.
However, uncertainty is expected to increase in future current account flows due to the high-intensity tariff policy of the Trump administration initiated last month. In particular, there is a possibility that the trade surplus will shrink in sectors like steel and automobiles, where the export share to the U.S. is significant, and if the tariff war intensifies, exports to China and Southeast Asia may also be affected.
◇ Current account surplus of $7.18 billion in February... 3rd-largest on record for February
According to the balance of payments (provisional) announced by the Bank of Korea on the 8th, South Korea's current account recorded a surplus of $7.18 billion in February. This marks a surplus for 22 consecutive months and is the third-longest surplus record since the 2000s, following the periods from May 2012 to March 2019 (83 months) and from May 2020 to July 2022 (27 months). The surplus amount is the third largest ever for February, following 2016 (+$8.27 billion) and 2017 (+$7.79 billion).
The trade balance, which accounts for the largest portion of the current account (exports - imports), improved significantly. The trade surplus increased sharply from $2.5 billion in January to $8.18 billion in February. This is the second highest amount for February on record, following 2017 (+$9.43 billion). The trade balance has maintained a surplus for 23 consecutive months since April 2023 (+$660 million).
Exports were recorded at $53.79 billion, a 3.6% increase compared to the same month last year. Although there was a decline of 9.1% in January, marking the first decrease in 16 months, exports have rebounded. While semiconductor exports (on a customs basis) decreased by 2.5%, increases were noted in items like computers (+28.5%), pharmaceuticals (+28.1%), and cars (+18.8%). Imports also rose by 1.3%, primarily driven by semiconductor manufacturing equipment (+33.5%), marking the first increase in five months.
The services balance recorded a deficit of $3.21 billion, worsening from the previous month's deficit of $2.06 billion. The main cause was an increase in royalty payments to foreign companies related to research and development. The primary income balance maintained a surplus of $2.62 billion, the same level as the previous month. Although the surplus from dividends decreased from $1.9 billion to $1.68 billion, the interest income surplus increased from $880 million to $1.2 billion.
Song Jae-chang, Director General of the Financial Statistics Department, noted that while the services balance deficit increased compared to the previous month, the expansion of the trade surplus significantly broadened the current account surplus. He said, "Especially, despite the decline in semiconductor exports, the growth trend in IT items centering on computers and camera modules continues, and non-IT items such as automobiles are also increasing, leading to a shift towards growth."
◇ Surplus expected to continue until March… uncertainty may increase from April
The Bank of Korea projected that the current account surplus flow will continue in March. This is due to last month's trade surplus reaching $4.98 billion, which shows improvement from February (+$4.3 billion). The trade balance and trade surplus both reflect the value calculated by subtracting the value of imports from exports, but the trade balance includes freight and insurance costs, making the surplus amount smaller than the trade surplus.
However, there is a possibility that the size of the current account surplus may shrink starting in April when the U.S. imposes high fixed tariffs. President Donald Trump announced on the 2nd (local time) that tariffs ranging from a minimum of 10% to a maximum of 34% on imported goods from countries around the world, including South Korea (25%), will take effect starting on the 9th.
Director General Song stated, "The trade surplus is expected to remain strong until March, but after the fixed tariffs come into effect in April, uncertainty will grow," and added, "This will affect exports from sectors with high export shares to the U.S., such as automobiles and steel, as well as exports from overseas local factories in China and Vietnam." He mentioned that he will soon analyze and report the impact of the fixed tariffs on exports by item.
There is also a possibility that the annual current account surplus forecast (set at $75 billion) presented by the Bank of Korea in February may be adjusted. Director General Song remarked, "Considering the U.S. tariff imposition and intensified export competition with China, it is expected that the surplus size will decrease compared to last year (+$99 billion)," adding, "As the fixed tariffs from the U.S. are anticipated to be stronger than expected, the increase in uncertainty in the long term is inevitable."
However, he emphasized, "The government is also aware of these issues and is making various efforts to support exports, and the Trump administration is leaving room for negotiation," urging that it is essential to monitor changes in the situation, including potential tariff adjustments and responses from neighboring countries.