Current account deficit likely to turn into surplus in October

According to a report on the international balance of payments for September released by the Bank of Korea on Oct. 30, the current account deficit significantly dwindled from US$4.7 billion in August to $1.22 billion in September, with deficits of goods and service accounts dropping to a large extent and the income account surplus increasing. As a result, the current account deficit from January until September this year recorded $13.8 billion.

Trade in goods account improved by $2.04 billion, from a $2.8 billion deficit in August to only $760 million deficit in September, given the increase of exports of heavy-chemical goods and the drop in imports in the wake of falling oil prices. Trade in services also drastically increased to a deficit of $1.24 billion in September from one of $2 billion in the previous month, with the deficits in travel and other service accounts diminishing by a large margin.

The income account surplus increased to $790 million from $320 million in the previous month, just as the dividend account deficit has turned into a surplus. The current transfers account deficit dropped sharply to $20 million from $220 million in August thanks to a sharp dip in remittances overseas.

The Bank of Korea predicted that the current account will achieve a surplus in the amount of more than $1 billion in October, with the total annual deficit expected not to surpass $10 billion.

The central bank believes that a current account surplus of more than $1 billion will be possible, considering that the goods account deficit will turn into a surplus, with the effect of falling oil prices expected to be reflected in October, and the travel account will likely improve to a significant degree due to the weaker won against the U.S. dollar.

By Chung Myung-je
Korea.net Chief Staff Writer