South Korea’s current account surplus in the first half of the year hit its lowest level in seven years due to weak export figures amid the prolonged trade spat between the United States and China.
The country’s current account surplus was 6.38 billion U.S. dollars in June, a 14.5 percent decline of 1.08 billion dollars from a year earlier, according to the preliminary data released by the Bank of Korea on Tuesday.
The fall was due to a drop in goods account surplus from 9.54 billion dollars to 6.27 billion dollars during the same period. The country’s exports plunged 15.9 percent while imports fell 11.8 percent in June year-on-year. The outbound shipments also extended the losing streak for seven consecutive months. The central bank attributed the decline to the ongoing trade war between the United States and China, a fall in the unit price of key export items including semiconductors and petroleum products, and a slump in exports to Beijing.
In the first half of 2019, the country’s current account surplus reached 21.77 billion dollars, down 24.7 percent from a year earlier (28.9 billion dollars). It is the lowest in seven years since the first half of 2012 when the figure recorded 9.65 billion dollars in the wake of the European financial crisis, and this is because South Korea’s products account surplus tumbled to 37.06 billion dollars, the lowest since the first half of 2013. The exports fell 9.8 percent from the same period last year, the first drop in two and a half years.
The South Korean central bank had expected last month that the country’s current account surplus would log 21.5 billion dollars in the first six months of 2019 and 37.5 billion dollars in the second half. The latest data seems to be supporting the analysis, as the current account surplus in the first half stayed close to the expected figure and considering that outbound shipments are usually made more in the latter half. However, some say that worsening external conditions including the escalating U.S.-China trade war and Washington’s decision to designate China as a currency manipulator will make it difficult to achieve the goal.
Gun-Huk Lee firstname.lastname@example.org