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Current account surplus hits 11-month high

Goods and income both up, but services sector begins to drop
Nov 07,2019
Korea’s current account surplus, the broadest measure of a country’s trade with the rest of the world, hit an 11-month high in September, overcoming a recent losing streak thanks to an improvement in trade of goods and income earned overseas.

The current account surplus stood at $7.48 billion in September, compared with a surplus of $11.01 billion a year earlier, according to preliminary data released by the Bank of Korea on Wednesday.

The latest reading marks the highest since October last year, allowing for a surplus for five straight months.

The goods surplus was one of the main contributors as the number almost doubled to $8.84 billion compared to the previous month.

Still, when compared to the same period last year, the balance significantly shrank from $13.01 billion under unfavorable trade conditions including the trade war between the United States and China, Japan’s export restrictions against Korea and the uncertainties surrounding Brexit.

The services trade, which measures travel, transport and construction balances, remained flat compared to a year ago.

“The services account deficit amounted to $2.51 billion, similar to that of one year earlier, as improvements in the travel account were offset by deteriorations in transport and the use of intellectual property accounts,” the Bank of Korea said in a statement.

The September reading in the services sector, however, represents a 39 percent increase in the deficit compared to the previous month.

The surplus in primary income, an index that records earnings on overseas investments minus payments made to foreign investors, rose 44 percent on year to $1.4 billion.

The index shows robust growth entering this year, backed by an increase of dividends earned by Korean corporation’s overseas branches.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]