Korea’s current account swings to deficit, four-month figures worsen

South Korea ran a current account deficit in April, swinging from the previous month’s surplus, as Asia’s fourth-largest economy continued to suffer from weakening growth momentum in Korea and abroad.

The country’s current account deficit reached $790 million in April, reversing from a $160 million surplus in March, Bank of Korea data showed on Friday.

In the first four months of the year, Korea’s current account deficit ballooned to $5.37 billion.

The central bank attributed April’s weak performance to Korean companies’ increased dividend payments to foreign investors and continued travel account deficits in the wake of eased COVID-19 pandemic lockdown rules.

The current account is the broadest measure of Korea's trade with the rest of the world.

April’s primary income account, which tracks wages of foreign workers and dividend payments overseas, logged a shortfall of $90 million, a turnaround from a $3.65 billion surplus in March.

Of the primary income account, the dividend category posted a deficit of $550 million versus a surplus of $3.15 billion the month prior due to Korean firms’ increased dividend payout to foreign investors.

The $90 million dividend payout, however, is much smaller than the eight-year average of $3.69 billion, the BOK said.

The service account posted a $1.21 billion deficit in April as the travel account remained in the red, posting a $500 million shortfall after a deficit of $740 million in March.

GOODS ACCOUNT TURNS TO BLACK

Friday’s data showed the goods account had a surplus of $580 million as exports fell 16.8% on-year to $49.11 billion while imports declined 13.2% to $48.53 billion.

The goods account has turned to the black for the first time since last September, the BOK said.

In the January-April period, however, Korea’s goods account posted a $9.27 billion deficit.

“Korea’s current account will gradually improve, buoyed by the goods account. We expect the current account to remain in the black for the rest of the year,” said a BOK official.

Koreans’ direct overseas investments increased by $980 million while their investments in securities rose by $1.75 billion in April from the previous month.

Foreigners’ direct investments in Korea declined by $740 million while their investments in securities increased by $5.38 billion.

Growth in exports from Asia's fourth-largest economy has worsened in recent months, while imports have also slowed amid lackluster local demand.

In January, Korea reported its biggest-ever current account deficit of $4.5 billion due to sluggish exports and a widened travel account loss.

Write to Jin-gyu Kang at josep@hankyung.com

In-Soo Nam edited this article.