S. Korea records first current account deficit in 7 years

News June 5, 2019 No Comments

S. Korea records first current account deficit in 7 years

SEOUL: South Korea saw its first current account deficit in seven years in April, authorities said Wednesday (Jun 5), as the export-dependent economy grapples with headwinds from the US-China trade war.

The world’s 11th largest economy posted a current account deficit of US$660 million in April, figures from the central Bank of Korea showed.

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A country’s current account is a broad measure of its trade with the rest of the world, including goods, services and payments made and received.

South Korea’s trade surplus plunged to US$5.67 billion from US$9.62 billion a year earlier with the US and China at loggerheads over commerce. Beijing is Seoul’s largest trading partner, absorbing a quarter of its exports.

Crucial semiconductor exports fell 12.7 per cent amid sagging global demand for memory chips and intensifying market competition.

At the same time dividend payments overseas leaped to US$6.78 billion, the second highest in the country’s history.

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Many South Korean companies pay dividends in April and officials said the current account deficit – the first since April 2012 – was due to seasonal factors.

The data came a day after the Bank of Korea reported the economy shrank 0.4 per cent quarter-on-quarter in the first three months, 0.1 per cent lower than its earlier estimate.

It was the South’s largest contraction since a 3.3-per cent drop in late 2008 at the height of the global financial crisis.

South Korea’s GDP grew 2.7 per cent in 2018, the weakest pace in six years.

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The trade spat between Beijing and Washington has hurt global growth prospects, hitting export-reliant Asian countries as China’s economy reels from US tariffs on billions of dollars in Chinese goods.

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