Nation`s Current Account Balance Suffered Losses in August for the First Time in 16 Months

The nation`s current account balance suffered losses in August for the first time in 16 months due to plunging exports and rising tourist spending abroad. The Bank of Korea announced yesterday that the nation`s current account balance recorded a 110 million dollars of deficit in August for the first time in 16 months since April 2000 (560 million dollars of deficit).

As exports fell by 20.1 percent, trade surplus amounted 720 million dollars, down 130 million dollars from July (850 million dollars). Exports of major items, such as semiconductors, information-communication equipment, and steel, fell by 59.7 percent, 24.2 percent, and 14.9 percent, respectively. Only exports of cars and ships increased by 13.6 percent and by 1.7 percent, respectively.

Since exports from September 1st through September 25th fell by 20 percent, rapid decrease (20 percent) in exports is continuing since July.

The Bank of Korea and the Korea Development Institute forecast that the nation`s current account surplus would not reach 10 billion dollars, much less than 13 billion dollars which were originally anticipated, in the fourth quarter of this year due to the slump in exports following the terrorist attacks in the U.S.

Meanwhile, the government held a vice-ministers` meeting, presided over by Kim Jin-Pyo vice-minister of Finance and Economy yesterday, and decided to push forward the existing export boost plans, such as varieties in export markets and items, overseas plant, and the expansion of construction orders, without a setback, to improve the current account balance.

Along with this, the government also agreed to promote service businesses, such as expansion of the cultural and tour facilities and the improvement of education market condition. The government also decided to consider opening the market in the field of fashion, design, and language learning.

hcs@donga.com