Current account surplus hits yearly high on growth in semiconductors

South Korea’s current account surplus reached a yearly high in July on the back of strong global trade and sturdy growth of the local semiconductors business, central bank data showed Thursday.

Also, the travel account deficit contracted from a year earlier amid a rise of inbound travelers from China and Japan, as well as a slowdown in the number of outbound travelers.

Seoul’s current account surplus stood at $8.76 billion as of end-July, up from $7.25 billion in the previous year, according to preliminary figures released by the Bank of Korea.

This marked the highest since $12.29 billion in September last year, as well as a current account surplus for 77 consecutive months dating to March 2012, the bank said.
 

The goods account surplus climbed to $11.43 billion in July, as exports surged 14.8 percent on-year to $54.06 billion amid increasing global demand for semiconductors.

The service account remained in the red and logged $3.12 billion in deficit, but this was an improvement from the $3.29 billion deficit in the same period last year.

The travel account over the past year has seen progress, contracting its deficit to $1.48 billion in July this year from $1.79 billion a year earlier, mostly due to a recovery in the number of tourists from China and Japan, officials said.

The number of Chinese visitors and Japanese visitors respectively jumped 45.9 percent and 35.1 percent on-year in July, while the total number of arrivals from overseas grew 24.4 percent, data showed. Outbound travel, in contrast, climbed just 4.4 percent on-year.

“Inbound travelers have visibly increased amid alleviated geopolitical risks on the Korean Peninsula,” said an official of the bank.

The ongoing trade conflict between Washington and Beijing weighed down on foreign direct investment here, but bond investments marked an upward trend on global investors’ preference for Seoul’s relatively stable credit rating and ample foreign exchange reserves, the BOK added.

By Bae Hyun-jung (tellme@heraldcorp.com)