In April, the current account recorded a surplus of $5.7 billion, maintaining a positive balance for the second consecutive year. The merchandise account led the current account surplus with a surplus close to $9 billion. This was largely due to the increased exports of semiconductors, along with rising exports of pharmaceuticals and steel.
The current account is a statistic that aggregates the exports and imports of goods and services, along with all economic transactions, including capital and labor, between residents and non-residents. It serves as an indicator of a country's basic economic strength and consists mainly of the merchandise account, service account, primary income account, and transfer account.
According to the 'balance of payments (preliminary)' announced by the Bank of Korea on the 10th, the current account recorded a surplus of $5.7 billion in April. This marks a surplus for 24 consecutive months. However, the surplus size decreased by $3.44 billion compared to the previous month (+$9.14 billion). Compared to April of last year (+$1.49 billion), it expanded by $4.21 billion.
The merchandise account (exports minus imports) led to the overall surplus. The surplus in the merchandise account for April was recorded at $8.99 billion, expanding by $500 million compared to the previous month ($8.49 billion). Compared to a year ago ($5.24 billion), it was $3.75 billion higher.
Exports amounted to $58.57 billion, up 1.9% compared to the same period last year. This marks an increase for the second consecutive month, following March (+2.2%). Exports of semiconductors (customs basis) increased by 16.9% year-on-year, while there was a rise in exports of pharmaceuticals (+22.3%), steel products (+8.1%), and wireless communication devices (+6.3%). However, exports of passenger cars (-4.1%), petroleum products (-13.8%), and computer peripherals (-7.6%) decreased.
By region, major export markets showed mostly favorable trends, including the European Union (EU) (18.4%), Southeast Asia (8.6%), and China (3.9%). Notably, exports to China, which worsened in March (-4.4%), turned around this time with an increase (+3.9%). However, exports to the United States fell by 6.8%, highlighting the impact of tariff policies.
Imports decreased. In April, imports recorded $49.58 billion, down 5.1% from the previous year. While capital goods (+8.7%) increased, the decrease in imports of raw materials (-10.4%) and consumer goods (-2.1%) had a significant impact. By item, imports of semiconductor manufacturing equipment (+26.8%), transport equipment (+20.8%), and information communication devices (+9.8%) increased, but imports of coal (-38.5%), crude oil (-19.9%), and grain (-11.5%) decreased.
The service account, which encompasses transactions related to travel, transportation, and intellectual property royalties, recorded a deficit of $2.83 billion. The deficit widened from the previous month (-$2.21 billion). The travel account deficit slightly decreased to -$500 million due to the spring travel peak for foreigners, but a temporary surge in domestic corporations' research and development services payments caused the deficit in other business services to widen (-$1.1 billion to -$1.51 billion).
The primary income account showed a deficit of $190 million. This was a significant decrease compared to the previous month (+$3.23 billion). The focus on dividends paid to foreigners in April caused the dividend income account to shift from a surplus of $2.6 billion to a deficit of $650 million. However, compared to a year ago (-$1.93 billion), the deficit size was significantly reduced. The interest income account recorded a surplus of $690 million, slightly down from the previous month (+$800 million).
The transfer account recorded a deficit of $260 million. The deficit size decreased by $110 million compared to the previous month (-$370 million) and was $90 million smaller than a year ago (-$350 million). The transfer account reflects the differences in unrequited grants and remittance-based transfers between residents and non-residents.
The financial account net worth, which indicates capital inflows and outflows, increased by $4.51 billion. Foreign direct investment rose by $3.32 billion. In foreign direct investment, domestic individuals' overseas investments rose by $3 billion, while foreign investments in the country decreased by $320 million. Securities investment increased by $14.51 billion, with domestic individuals' overseas investments increasing by $12.33 billion and foreign investments in the country decreasing by $2.18 billion.