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S. Korea's current account surplus at 9-month high in July

According to Yonhap News,

By Kim Soo-yeon

SEOUL, Sept. 4 (Yonhap) -- South Korea's current account surplus widened to a nine-month high in July as exports fell at a slower pace than imports amid major economies' reopenings following the pandemic-caused lockdowns, central bank data showed Friday.

The current account surplus reached US$7.45 billion in July, up from $6.88 billion the previous month, according to the Bank of Korea (BOK). The current account is the broadest measure of cross-border trade.

The reading marked the largest surplus since October 2019, when the country posted a surplus of $7.83 billion.

The July tally also marked the third straight month of a surplus after the country logged a current account deficit of $3.33 billion in April, the largest in almost a decade on faltering exports amid the new coronavirus outbreak.

In the first half, the current account surplus reached the smallest in eight years as overseas shipments were hit by the virus outbreak.

The goods balance posted a surplus of $6.97 billion in July, larger than a surplus of $5.87 billion the previous month.

The surplus in the goods balance widened to an eight-month high in July as exports fell at a slower pace than imports, the BOK said.

The BOK recently revised down its second-half forecast for the surplus in the goods balance to $40 billion and the full-year projection to $64 billion.

"Given the current account data, the surplus in the goods balance is expected to be within the forecast range," Lee Seong-ho, director of the BOK's monetary and financial statistics division, said in a briefing.

Exports, which account for half of the South Korean economy, fell 10.8 percent on-year to $43.2 billion in July, while imports declined 14.2 percent to $36.2 billion on low oil costs.

The country's overseas shipments were battered by the fallout of the COVID-19 pandemic as it hit supply chains with global lockdowns and stricter social distancing guidelines.

But the pace of the slump in exports has declined since June as major economies slowly began to resume business activities.

he service account, which includes outlays by South Koreans on overseas trips, logged a deficit of $1.11 billion in July after logging a shortfall of $1.26 billion in June.

The primary income account, which tracks wages of foreign workers and dividend payments overseas, logged a surplus of $1.95 billion in July, larger than a surplus of $1.74 billion in June.

The capital and financial account, which covers cross-border investments, posted a net inflow of $9.59 billion in July, compared with a net inflow of $7.15 billion in June.

Last week, the BOK lowered its 2020 outlook for the current account surplus, citing sluggish global trade.

The surplus is forecast to reach $54 billion this year, smaller than its previous estimate of $57 billion. The 2021 surplus is likely to reach $55 billion, it added.

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Source: Yonhap News (Sep 4 2020)

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