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Current account surplus up 8.9%

But 9-month high is thanks to weak won, not high export figures
Sept 06,2019
Korea’s current account surplus hit a nine-month high in July as increased overseas investment income and a reduced deficit in the service sector offset shaky exports.

The Bank of Korea said on Thursday that the current account surplus, the broadest measure of Korea’s trade with the rest of the world, registered $6.95 billion in July, up 8.9 percent compared to the previous month.

The figure is the highest since October 2018, but the rebound primarily stems from the weak won against the dollar that pushed up the value of dividends and incomes earned by Korean companies abroad, rather than exports.

The surplus in primary income, an index that records earnings on overseas investments minus payments made to foreign investors, soared to an all-time high in July at $3 billion, up 8.3 percent from a month earlier.

“With the help of the continued current account surplus, Korean corporations invested the earnings from overseas into foreign securities and bonds,” said Moon So-sang, the director the of monetary & financial statistics division at the Bank of Korea.

“So, the move led to a positive result - the increase in interest rates and dividend incomes,” she said.

Another contributor was the services trade, which measures travel, transport and construction balances. The service account deficit reduced from $3.09 billion in June to $1.67 billion with a rise in the number and spending by inbound tourists.

The goods surplus, however, continued to struggle due to unfavorable trade conditions including the trade war between the United States and China, Japan’s export restriction against Korea and the uncertainties surrounding Brexit.

The balance of goods decreased 1.3 percent to $6.19 billion in July over a month earlier. When compared to the same period last year, the balance almost halved from $10.79 billion.

Exports slightly rose 9.7 percent to $57.24 billion, while imports jumped 11.5 percent to $42.08 billion.

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