South Korea’s Current-Account Surplus Widens to Six-Month High
South Korea’s current-account surplus widened in May to a six-month high as exports increased from the previous month and annual dividend payments to foreign shareholders declined.
The surplus was $3.6 billion compared with a revised surplus of $1.7 billion in April, the Bank of Korea said in a statement today in Seoul. The current account is the broadest measure of trade, tracking goods, services and investment income.
The prospect that Europe’s debt woes will further damp global demand has weighed on consumer and business sentiment in South Korea, where the central bank earlier this month held off from altering borrowing costs for a 12th straight month. Confidence among U.S. consumers fell in June for a fourth consecutive month, while South Korean manufacturers’ sentiment dropped to a four-month low and consumer confidence slid to a three-month low.
“We may see a further economic slowdown unless the EU moves quickly and decisively,” Park Sang Hyun, chief economist at HI Investment & Securities Co. in Seoul, said before the release. “Interest rate cuts will come in South Korea as the last resort.”
The won advanced 0.2 percent to 1,156.17 per dollar yesterday, according to data compiled by Bloomberg, trimming this quarter’s decline to 2 percent. The Kospi was little changed.
The surplus on traded goods was $1.75 billion last month compared with a revised $1.75 billion surplus in April, today’s report showed.
Total exports on a customs-cleared basis rose to $47.1 billion in May from $46.1 billion in April, led by steel, semiconductor chips and machinery, according to today’s statement. Imports were at $44.8 billion, up from April.
Overseas shipments probably rose 0.5 percent in June from a year earlier after declining for three consecutive months, according to the median estimate of 15 economists in a Bloomberg News survey. South Korea is scheduled to report export data on July 1.
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