In April, the current account recorded a surplus of $5.7 billion, maintaining a surplus for 24 consecutive months. This is the third-longest streak of surpluses since the 2000s. The surplus amount is the third largest on record for April. The increase in the surplus was significantly influenced by strong semiconductor exports and a decrease in imports due to falling oil prices, which expanded the goods account (exports - imports) surplus. Typically, the primary income account has worsened in April, but this time it recorded only a slight deficit, contributing to the overall current account surplus.
However, uncertainties regarding tariffs under the Trump administration's second term are expected to negatively impact future current account flows. The effects of tariffs are already evident in sectors with high U.S. export shares, such as steel and automobiles, and the global downturn in construction and manufacturing industries is also becoming prominent. The Bank of Korea projected that the tariff effects will become more pronounced starting in the second half of the year.
◇ April current account surplus of $5.7 billion… the third-largest on record for April
According to the 'Balance of Payments (provisional)' announced by the Bank of Korea on the 10th, the current account recorded a surplus of $5.7 billion in April. This marks 24 consecutive months of surplus and is the third-longest surplus record since the 2000s, following the periods from May 2012 to March 2019 (83 months) and from May 2020 to July 2022 (27 months). The surplus amount is the third largest for April, following 2015 ($7.22 billion) and 2014 ($6.88 billion).
The goods account, which constitutes the largest portion of the current account, significantly contributed to the surplus. The April goods account surplus was recorded at $8.99 billion, which is an increase of $0.5 billion compared to the previous month ($8.49 billion). Compared to a year ago ($5.24 billion), this shows an increase of $3.75 billion. The goods account has maintained a surplus for 25 consecutive months since April 2023 (+$0.66 billion).
Specifically, exports increased while imports decreased. Exports totaled $58.57 billion, marking a 1.9% increase compared to the same period last year. This is the second consecutive month of growth following March (+2.2%). Semiconductor exports (customs basis) expanded by 16.9% compared to a year ago, and exports of pharmaceuticals (+22.3%), steel products (+8.1%), and wireless communications devices (+6.3%) also increased. In contrast, imports in April were recorded at $49.58 billion, down 5.1% from a year ago. While capital goods (+8.7%) increased, the significant declines in raw materials (-10.4%) and consumer goods (-2.1%) had a large impact.
The improvement in the primary income account compared to previous years also helped the current account surplus. In April, the primary income account showed a deficit of $190 million. Typically, April sees a concentration of dividend payments to foreigners, leading to an increased deficit in the primary income account, but this year it was significantly reduced compared to a year ago (-$1.93 billion). However, results were worse compared to March, when there was no dividend payment effect (+$3.23 billion).
The services account recorded a deficit of $2.83 billion, widening from the previous month's deficit (-$2.21 billion). Despite a reduction in the travel account deficit due to the peak season for foreign travelers in spring (-$720 million to -$500 million), the deficit in other business services widened significantly due to a temporary surge in domestic corporations' research and development payments (-$1.1 billion to -$1.51 billion).
Song Jae-chang, Director General of the Bank of Korea's Financial Statistics Department, noted, 'In April, the current account recorded a relatively large surplus compared to previous Aprils,' explaining that 'the expansion of the goods account surplus was mainly due to strong exports of semiconductors and a reduction in imports due to falling oil prices.'
◇ Bank of Korea: Tariff effects from the U.S. will be seen starting in the second half
The Bank of Korea projected that the effects of U.S. tariffs will emerge starting in the second half of the year. Director General Song stated, 'While the effects of U.S. tariffs are already being felt in sectors like steel, aluminum, automobiles, and automobile parts, it is expected that these effects will become pronounced after the second half of the year,' adding, 'In the case of steel, there is a 3-4 month lag from contracts to exports, so the impacts of tariffs will be clear starting from the third quarter.'
Regionally, the decrease in U.S. exports is notable. In April, exports increased in Southeast Asia (+8.6%) and the European Union (+18.4%), but decreased in the U.S. (-6.8%) and Japan (-5.3%). Notably, the decrease in U.S. exports has expanded to 8.1% compared to the previous month, while steel subject to a 25% tariff from March has reduced by 20.6%.
Regarding the assessment of a 'recession-type surplus,' it is deemed too early to make such a judgment. Director General Song mentioned, 'A recession-type surplus occurs when imports decrease more than exports,' adding, 'Currently, a significant portion of the import decrease is due to falling energy prices, and excluding this effect, imports are also increasing. We need to monitor the situation a bit longer to determine whether a recession-type surplus is occurring.'
The Bank of Korea expects that the strong export trend will continue in the first half, making the surplus estimate of $37.8 billion achievable. The primary income account, which recorded a deficit in April due to foreign dividend payments, is expected to return to a surplus starting in May as seasonal factors diminish. The cumulative surplus of the current account from January to April amounts to $24.96 billion, reaching 66% of the target for the first half.
Director General Song stated, 'With improvements in the trade balance in May, the goods account is expected to continue its surplus trend,' adding, 'The decrease in the increase of goods imports due to falling oil prices also played a role.' He further explained that 'as external financial assets continue to rise, foreign dividend income is increasing, and interest income is also expected to maintain a surplus trend in May.'