Korea seen to top Japan in current account surplus for first time

With Korea continuously posting current account surpluses, analysts cautiously predict that the nation’s current account surplus for this year will likely surpass Japan’s for the first time ever.

According to the Bank of Korea on Sunday, the nation’s cumulative current account surplus for the year through August amounted to 42.22 billion U.S. dollars, about 700 million dollars more than 41.53 billion dollars that Japan posted during the same period.

Korea, which posted current account surpluses for 20 consecutive months through September, continues to sustain the trend of a solid current account surplus, with its monthly export exceeding 50 billion dollars for the first time ever last month. As such, Korea’s annual current account surplus for this year is expected to exceed Japan’s. For one, Korea is outpacing Japan in the outlook of this year’s annual current account balance. Korea’s current account surplus target as adjusted upward by the Bank of Korea on October 10 is 63 billion dollars. The Japan Research Institute, the Japanese government’s think tank, projected the island country’s current account surplus for this year at 60.1 billion dollars on October 3.

Japan posted current account surpluses that were nearly 10 times the size of Korea`s on average during the 1990s and the 2000s. In the wake of the global financial crisis in 2008, Japan posted 159.36 billion U.S. dollars in current account surplus, about 50 times that of Korea’s (3.2 billion dollars). But as Japan saw its energy import soar due to the earthquake in East Japan and its electric and electronic companies including Sony and Panasonic waned, its current account surplus drastically declined beginning in 2011. In contrast, Korea saw export of its major products including mobile phones, semiconductors and automobiles constantly escalate, which has spearheaded the pace of a continuous surplus in the nation’s current account balance.