(SEOUL=NEWSIS) Korea has become a net asset country for the first time.

Korea’s external assets are larger than its external debt. In other words, we have more to receive from outside than we have to give.

According to the International Investment Position (IIP) at the end of September 2014 by the Bank of Korea, Korea’s external investment as of the end of September is USD 1.288 trillion, USD 27.7 billion more than the financial debt (foreign investment).

Korea’s external assets have exceeded its external debt for the first time since Korea first started collecting these statistics in 1994.

Just three months ago, Korea was a net external debt country where inbound foreign investment was larger than Korea’s investment in other countries. The net international investment balance, which is calculated by subtracting foreign investment from external investment, was minus USD 10.5 billion as of the end of June.

Korea became a net asset country, as the foreign investment was reduced by USD 23.1 billion due to the weak won while the external investment was increased by USD 10.2 billion.

The weak won causes a reduction in dollars. The amount of investment, therefore, is decreased even if the amount of foreign investment is the same.

The balance of net external bonds (USD 224.9 billion) is a record high, as the external bonds have increased while the external debt has decreased. The external debt as of the end of September is USD 429.1 billion, a USD 13.1 billion decrease from the end of June. The amount of external bonds is USD 654 billion, a USD 6.2 billion increase from three months ago.

According to the Bank of Korea, the fact that Korea is a net asset country proves that its external soundness has improved significantly.

"Korea as a net asset country means that Korea’s external soundness is firm after the 2008 global financial crisis, unlike other emerging countries. The ongoing current account surplus and sufficient foreign exchange reserves also affected the asset increase," said a Bank of Korea official.

Japan, China and Germany are some of the advanced countries that are net asset countries.

miel0725@newsis.com

Source Text

Source: Newsis (November. 20, 2014)

** This article was translated from the Korean.