S.Korea posts 2nd current account deficit in 3 months due to flat exports

South Korea in November last year suffered its second current account deficit in three months due to plummeting exports of key items like semiconductors. 2022 is expected to see a surplus for the year thanks to its first-half performance but at a much smaller amount from 2021.

Experts predict that even if the current account finishes in the black this year, it will be a "recession-type surplus" dependent on an import decline due to the global economic slowdown.

The Bank of Korea on Tuesday said the current account balance in November last year finished $620 million dollars (769.4 billion won) in the red, a sharp drop of $7.4 billion from the same month in 2021. The fall was to the nosedive in the goods balance, which saw a deficit of $1.5 billion, a decline of $7.6 billion, as exports plummeted while imports increased.

Exports fell 12.3% to $52.3 billion over the same period, the biggest fall in two in 2.5 years since 28.7% in May 2020 during the COVID-19 pandemic and the third consecutive month of decrease since September last year.

Most leading export items saw minus growth, with semiconductors falling 28.6%, industrial chemical products 16% and steel products 11.3%. Those that saw rises included passenger vehicles with 3%, automotive parts 1% and petroleum products 22.1%.

By region, exports to major regions saw declines like those to China with 25.5%, Southeast Asia 20.7%, Latin America 19.2% and Japan 17.8%.

Though shipments to the US rose 8% and those to the European Union 0.1%, the growth rate failed to reach double digits.

Imports in November last year rose 0.6% to $53.8 billion for the 23rd consecutive month due to more purchases of raw materials and grain. The service balance finished $340 million in the red, down $70 million due to the drop in export freight charges reducing the surplus in transportation.

The cumulative current account surplus last year from January to November was an estimated $24.3 billion, or under 30% of that in the same period last year of $82.2 billion.

Write to Mi-Hyun Jo at mwise@hankyung.com