In February, the current account recorded a surplus of over $7.1 billion, marking the 10th consecutive month of surplus. It is the third-longest surplus since the 2000s. Despite a decrease in semiconductor exports, the increase in exports of information and communication technology (IT) items such as computers significantly contributed to the overall shift in exports to an increase.
The current account is a statistic that sums up the export and import of goods and services between countries, along with capital, labor, and all economic transactions. It is a key indicator representing a country’s fundamental strength, composed largely of the balance of trade, balance of services, primary income account, and transfer income account.
According to the 'balance of payments (provisional)' report released by the Bank of Korea on the 8th, the current account recorded a surplus of $7.18 billion for February. This marks the 22nd consecutive month of surplus, and the scale increased more than twice from the previous month (+$2.94 billion). Compared to last February (+$6.44 billion), it has increased by $740 million.
The balance of trade (exports - imports) led the overall surplus. The surplus in February's balance of trade was recorded at $8.18 billion, expanding to three times the previous month's ($2.5 billion). Compared to a year ago ($6.92 billion), it is $1.26 billion more.
Exports recorded $53.79 billion, a 3.6% increase from the same period last year. In January, exports had decreased by 9.1%, marking the first decline in 16 months, but they have turned to an increase again in a month. While semiconductor exports (customs basis) decreased by 2.5% compared to a year ago, marking the first decline in 16 months, the exports of other items, such as computers (+28.5%), pharmaceuticals (+28.1%), and cars (+18.8%), all increased.
Imports turned to an increase for the first time in five months. In February, imports recorded $45.61 billion, a 1.3% increase from a year ago. While capital goods (+9.3%) and consumer goods (+11.7%) increased, raw materials (-9.1%) decreased. By item, semiconductor manufacturing equipment (+33.5%), durables for direct consumption (+15.9%), semiconductors (+5.0%), and petroleum products (+4.1%) all increased, while coal (-32.7%), gas (-26.7%), and cars (-21.0%) decreased.
The balance of services, which includes transactions such as travel, transportation, and royalties from intellectual property, recorded a deficit of $3.21 billion. The deficit widened significantly from the previous month (-$2.06 billion). Although the deficit for travel improved (-$1.68 billion to -$1.45 billion) after the winter vacation travel peak season ended and the effects of the long Lunar New Year holiday from the previous month disappeared, the deficit in royalties for intellectual property usage expanded due to increased payments made by domestic corporations to overseas companies for research and development related royalties (-$10 million to -$580 million).
The primary income account, reflecting flows of wages, dividends, and interest, showed a surplus of $2.62 billion. The surplus remained the same as the previous month. The surplus in dividends decreased from $1.9 billion to $1.68 billion, whereas the interest income account increased from $880 million to $1.2 billion. The surplus in dividends decreased as dividend income from securities investments fell, while the surplus in interest income expanded as interest payments decreased.
The transfer income account recorded a deficit of $410 million. The deficit widened by $290 million compared to the previous month (-$120 million) and was the same as a year ago (-$410 million). The transfer income account refers to the differences in non-reciprocal exchanges, such as free aid and remittances.
The net worth of the financial account, indicating capital inflows and outflows, increased by $4.96 billion. Direct investment rose by $3.63 billion. Domestic investments abroad increased by $4.55 billion, while foreign investments in the country rose by $910 million. Securities investment increased by $10.96 billion, with domestic investments abroad rising by $13.2 billion and foreign investments in the country increasing by $2.24 billion.