South Korea's economy posted the largest currency account surplus in its history in June on the back of faster fall in imports than exports, boosting worry about the so-called recession-type surplus, central bank data showed on Monday.
Current account balance, the broadest measure of trade in goods and services, posted a surplus of 12.17 billion U.S. dollars in June, according to the Bank of Korea (BOK). It is the largest monthly surplus in the country's history, surpassing the previous high of 11.87 billion dollars tallied in June last year.
The current account balance stayed in black for 52 months, keeping a trend of the longest monthly surplus thanks to faster fall in imports than exports. Goods exports dipped 7.4 percent from a year earlier to 45.25 billion dollars in June, while goods imports tumbled 10.1 percent to 32.43 billion dollars.
Trade surplus for goods reached 12.82 billion dollars in June, up from a 10.74 billion-dollar surplus in May. The BOK attributed the larger trade surplus to lower crude oil prices that helped imports fall at a faster pace than exports.
Global crude oil prices traded at a low 40 dollars per barrel in June, some 20 dollars lower than a year earlier. It led to a decline in raw material imports. The continued surplus came amid falling exports, which account for about half of the export-driven economy, putting an upward pressure on the domestic currency that worsens price competitiveness of local exporters further at a time when global trade weakens.
For the first six months of this year, current account surplus amounted to 49.98 billion dollars, compared with a surplus of 50. 36 billion dollars in the same period of last year. During the January-June period, trade surplus for goods reached 61 billion dollars, up 3.1 billion dollars from the same period of last year.
Exports slumped 11.1 percent from a year earlier to 245.99 billion dollars in the first half, while imports tumbled 15.5 percent to 184.99 billion dollars. Services account balance, which measures the flow of travel, transport costs and royalties, logged a deficit of 1.38 billion dollars in June, up from an 11.4 billion-dollar deficit in May. Travel account deficit increased from 250 million dollars in May to 740 million dollars in June.
Construction account posted a surplus of 740 million dollars, but transport account recorded a deficit of 280 million dollars in June. Primary income account, which gauges investment and interest income as well as salary, was a surplus of 1.26 billion dollars in June, up from a surplus of 910 million dollars in the previous month.
It was attributable to an increase in dividend income from overseas investment. Financial account, which measures cross-border capital flow without transactions in goods and services, registered an outflow of 9.6 billion dollars in June, up from an 8.93 billion-dollar outflow in May.
During the January-June period, the financial account outflow reached 46.91 billion dollars, down from 52.47 billion dollars in the same period of last year. Direct investment posted an outflow of 1.48 billion dollars in June, up from 720 million dollars in May as local residents increased outbound investment.
Portfolio investment, which includes stock and bond transactions, recorded an outflow of 6.2 billion dollars in June, up from an 4.36 billion-dollar outflow in May as foreign funds flowed out of the local financial market on growing uncertainties such as Brexit, or British referendum to leave the European Union (EU).
Other investment, including trade credit and foreign debts, logged an outflow of 2.33 billion dollars in June, down from 3.92 billion dollars in May.
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