With the September current account surplus nearing $13.5 billion, it marked the second largest on record. The cumulative surplus from January to September is the largest ever. The surplus in the goods account expanded on the back of strong exports of semiconductors and automobiles. The Bank of Korea (BOK) said the current account in November and December is also expected to remain solid, and projected the annual surplus to exceed the previous forecast of $110 billion.
According to the "balance of payments (preliminary)" released by the Bank of Korea (BOK) on the 6th, the current account surplus in September came to $13.47 billion. It was the largest for any September and the second largest for any month on record. As a result, the current account has been in surplus for 29 straight months, the second-longest streak since 2000 after the 83 months from May 2012 to March 2019.
◇ September current surplus $13.47 billion… back above $10 billion in a month
In August, the current account surplus was tallied at $9.15 billion, falling below $10 billion for the first time in four months. That was because the goods account surplus shrank from $10.78 billion to $9.4 billion as exports of steel and machinery declined due to U.S. tariff effects. In September, however, the goods account surplus widened to $14.24 billion on strong exports, lifting the current surplus as well.
The primary income account, which reflects the flow of wages, dividends, and interest, also posted a sharp increase in surplus, supporting the current surplus. The primary income surplus in September was $2.96 billion, the second largest for any September after last year's $3.1 billion. With the seasonal impact of quarterly dividend payments on securities investment in the previous month fading, the surplus widened.
Shin Seung-cheol, Director General of the BOK Economic Statistics Department 1, said, "The size of the current surplus in September expanded further because the goods account posted the second largest surplus on record for the entire period thanks to strong exports of semiconductors and ships, and the primary income account also recorded the second largest surplus for September."
Shin added, "Merchandise exports returned to growth in two months as electronic (IT) items such as semiconductors continued to increase, and non-IT items such as passenger cars and ships also rose due to the base effect from last September's Chuseok holiday."
Buoyed by the September current surplus, the cumulative surplus set a new record. The cumulative current account surplus for January to September reached $82.77 billion, the largest ever. The goods account surplus totaled $85.9 billion, the third largest on record, while the primary income surplus came to $22.56 billion, the largest on record.
◇ Record cumulative surplus from January to September… BOK says "surplus to continue on semiconductor supercycle"
The Bank of Korea (BOK) projected that this year's annual current account surplus will exceed the previous forecast of $110 billion. The goods account surplus is continuing as semiconductor strength persists and imports decline due to lower raw material prices. The settlement of the Korea-U.S. tariff talks is also expected to have a positive effect by removing related uncertainties.
Shin said, "The boom from the semiconductor supercycle is the biggest factor behind this year's expansion of the current surplus," adding, "Automobiles have seen a decline in exports to the United States, but exports to Europe and other regions are holding up, and strong ship exports are continuing, so non-IT items are also showing a favorable trend."
Shin continued, "In October, the current account surplus is expected to shrink slightly due to fewer working days," but noted, "In November and December, strong semiconductor exports, stable oil prices, and a continued primary income surplus are expected, so we will regain a favorable current account surplus trend."
A $350 billion U.S.-bound investment fund is expected to affect the future current account trend. Shin said, "If domestic raw materials or labor are used in the process of building or investing in factories overseas, it will contribute to goods exports, and when the business enters its main phase and operating profits are generated and distributed back to Korea, it will be reflected in the primary income account, acting as a factor increasing the current account surplus."
However, Shin said, "Given the significant concerns about the hollowing out of domestic manufacturing, the weakening of domestic investment capacity, and domestic corporations' relocation overseas, the government and corporations should consult and proceed with projects in a direction that benefits Korea."