Tourism Balance Deficit Soars to 600 Million Dollars

Various indicators have shown that the Korean economy may be in deep trouble.

With the frozen consumer sentiment, the consumer index in February hit an all time low in two years. Current accounts in January recorded a deficit for the past two consecutive months and export and import prices in February soared, aggravating export profitability and inflation.

The Bank of Korea announced that the current account in January posted a deficit of 350 million dollars due to deficit in service balance including tourism balance. Last December current accounts registered a deficit of 650 million dollars.

In particular, the tourism balance deficit in January hit a record high of 590 million dollars by month. Accordingly, service balance deficit also recorded an all time high of 1.19 billion dollars by month.

The National Statistical Office announced today that the consumer index, which shows business and consumer conditions, registered 73.5 points in February, down 6.1 points from the previous month. This is the lowest level since February 2001, when the index posted 73.2 points. A consumer index below 100 means that more than half of the population consider economic conditions to be bad.

Among items for the consumer index, the business index tumbled 63.9 points in 25 months since beginning its downward ascent in January 2001.

The consumer expectation index, which shows projections for consumer spending for the next six months, dropped 0.3 points to 96.1 points from January. Among the items of the consumer expectation index, the business expectation index also slipped to 89.1 points in February from 92.8 points in January, showing a gloomy outlook for the future.

The BOK announced that export and import prices in February rose 2.5% and 3.5% respectively month on month. This is the biggest rise in 11 months since last March, when export and import prices shot up 3.0% and 4.1% respectively.

“Export and import prices rose sharply as the won-dollar and won-yen exchange rates in February rose 1% and 0.3% respectively and raw material prices including oil prices rose as well,” BOK Inflation Statistics Manager Kim Seung-chul said.

Kwu-Jin Lim Eun-Woo Lee mhjh22@donga.com libra@donga.com