Invest KOREA

South Korea's current account surplus widened in February from the previous month mainly because spending on overseas travel decreased amid still brisk exports, the central bank said Tuesday.

The current account surplus reached $1.18 billion in February, up sharply from a revised $154.7 million the previous month, according to the Bank of Korea (BOK). The current account is the broadest measure of cross-border trade.

The current account remained in the black for the 12th straight month in February, aided by strong exports, which account for about 50 percent of the Korean economy.

The surplus is widely expected to bolster the local currency, which has risen about 1.83 percent to the U.S. dollar so far this year.

"Exports remained brisk and a shortfall of the service account narrowed last month as the winter vacation season wrapped up," a BOK official said.

He said a sharp increase in oil prices, sparked by political upheaval in the Middle East and North Africa has not been fully reflected in the cost for last month's crude imports, but the growth pace of the costs for oil imports picked up compared with that seen in January.

South Korea's goods balance posted a surplus of $1.58 billion in February, up from a revised $1.56 billion in January.

A shortfall in the service account, which includes outlays by South Koreans on overseas trips, narrowed to $569.1 million in February, compared with a $1.64 billion deficit the previous month.

Meanwhile, the capital and financial account, covering cross-border investments, posted a net outflow of $2.26 billion in February, compared with a net outflow of a revised $1.28 billion in January.

On Dec. 10, the BOK revised down its projection for the current account surplus to $18 billion for 2011, as imports will likely pick up amid the economic recovery.

Source: Yonhap News (March 29, 2011)