South Korea’s current account surplus widened to a four-month high in March as exports gained ground despite the yen’s weakness and the service account improved, the central bank said Monday.
The current account surplus reached $4.98 billion in March, up from $2.71 billion the previous month, according to the Bank of Korea. The current account is the broadest measure of cross-border trade.
The March reading was the largest since November last year, marking the 14th straight month of a surplus run. In the first quarter, the cumulative surplus amounted to $10.02 billion.
The data came even as the yen’s weakness is feared to hurt Seoul’s exporters by boosting the price competitiveness of Japanese rivals. The Korean won has risen more than 20 percent against the yen since November.
But BOK Gov. Kim Choong-soo said last week that the yen’s weakening trend is likely to persist for a long time, expressing concerns that its negative impacts on South Korea’s exports will become visible down the road.
While the weakening yen had negligible impact on South Korea’s exports and the service account in the first quarter, the BOK said that the yen’s effects on exports are likely to be felt with a time lag from the second quarter.
“The yen’s (negative) impacts are likely to be the most visible in the second or third quarter,” Kim Young-bae, the director general of the BOK’s economic statistics division, said at a press conference.
He said that compared with the past, the weaker yen has had limited effects on Korean products with non-pricing competitive edges, adding that rising overseas production has made exports less vulnerable to price swings.
Kim also said that the surplus for April is likely to surpass an average surplus in the first quarter.
In March, Korea posted a wider surplus of the goods balance worth $4.21 billion from the previous month as exports of tech products and chips remained firm while imports declined.
Last month, exports rose 1.3 percent on-year to $47.99 billion while imports fell 1.5 percent to $43.78 billion.
But on a customs-cleared basis, Korea’s exports only inched up 0.2 percent with its shipments to Japan tumbling 18.2 percent from a year earlier.
Kim, the director general at the BOK, said that exports to Japan sharply declined due mainly to a high comparison base last year when exports got a boost from the fallout of Japan’s earthquake and tsunami in 2011.
The service account, which includes outlays by South Koreans on overseas trips, posted a surplus of $905.2 million last month, a turnaround from a shortfall of $461 million the previous month.
The primary income account, which tracks wages for foreign workers and dividend payments overseas, logged a shortfall of $222.3 million in March, compared with a surplus of $628.9 million in February.
In March and April, offshore investors usually repatriate dividend payments by Korean companies that close their books in December, crimping the country’s income account balance.
Meanwhile, the capital and financial account, covering cross-border investments, posted a net outflow of $6.81 billion last month, compared with a net outflow of $3.31 billion in February, the central bank said.
In April, the BOK slightly revised up the 2013 current account surplus estimate to $33 billion from $32 billion. Last year, Korea’s current account surplus reached a record high of $43.14 billion. (Yonhap News)
