The Bank of Korea predicted that this year's current account surplus will exceed $110 billion, topping the forecast made in Aug. It said a boom in the semiconductor cycle has sharply pushed up exports in the second half, improving the goods balance. However, next year the surplus is expected to be somewhat smaller than this year as the impact of U.S. tariff measures widens.
On the 23rd, the Bank of Korea published a report titled "Assessment of the recent export and current account situation and outlook." The report was written by Vice Administrator Lim Ung-ji of the International Trade Team, Director Kim Jun-young of the balance of payments team, and Director Lee Hyun-ah of the Economic Trends Team.
According to the research team, Korea's recent exports have remained solid despite worsening external conditions. Last month's customs-cleared exports hit an all-time high of $65.9 billion, and the Aug. current account posted a surplus of $9.15 billion, the largest on record for the same month. The current account has remained in surplus for 29 consecutive months.
Semiconductors were at the center of the latest export strength. Of the 6.5% year-over-year export growth rate in the third quarter of this year, semiconductors contributed 5.6 percentage points, and the share of semiconductors in total exports expanded to 23% this year (January–September) from 20% last year. The research team analyzed that exports increased as exports of high-bandwidth memory (HBM), essential for artificial intelligence (AI) servers, stood out, while prices of general-purpose DRAM also surged.
The research team said, "This expansion phase in the semiconductor cycle is continuing on the back of corporations' demand for AI infrastructure investment and national-level support, and it is highly likely to last longer as it leads to industrial convergence encompassing manufacturing and services," adding, "The fact that high-performance application-specific semiconductors (HBM), essential to implement AI functions, are becoming the market's main products will work to the advantage of our semiconductor companies with high technological prowess."
The semiconductor-led export strength is feeding through to an improvement in the current account. The Bank of Korea (BOK) expects the current account surplus this year and next to exceed the levels projected in Aug. ($110 billion this year and $85 billion next year). Alongside rising semiconductor exports, slower imports due to falling international raw material prices and a wider primary income surplus have contributed positively.
The research team said, "Going forward, the current account will likely maintain a robust surplus for a considerable period, supported by expanding semiconductor exports and solid primary income receipts," adding, "However, next year the current account surplus is expected to narrow somewhat from this year as the impact of U.S. tariff measures expands."
It also said, "If U.S.-China trade tensions reignite and lead to sluggish global trade, or if primary income payments increase due to expanded inflows of foreign securities investment funds, the surplus could be partially constrained."