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S. Korea's Balance of Payments Registers Current Account Deficit in January 2023

Photo by Dmitry Demidko / Unsplash

According to preliminary data from the Bank of Korea, the country’s balance of payments posted a current account deficit of $4.52 billion in January. 

This is a significant decline from the surplus recorded a year earlier.

The goods account recorded a deficit of $7.46 billion in January, down from a surplus of $1.54 billion a year earlier. 

This was primarily due to weaker exports and higher imports. 

The deficit in the services accounts widened to $3.27 billion from $0.83 billion in January last year due to a decline in the surplus in the transportation account and an increase in the deficit in the travel account.

However, the primary income account surplus increased to $6.38 billion in January from $1.87 billion a year earlier. 

The secondary income account recorded a deficit of $0.16 billion.

On the financial account, net assets decreased by $0.64 billion in January. 

Direct investment assets increased by $1.77 billion, and direct investment liabilities by $1.17 billion. 

During the month, portfolio investment assets increased by USD 3.69 billion, and portfolio investment liabilities by USD 5.40 billion. 

Financial derivatives recorded a net decrease of USD 1.50 billion.

Other investment assets increased by $1.95 billion, and liabilities by $4.38 billion. Reserve assets increased by $4.41 billion.

Recent balance of payments data highlights South Korea’s economic challenges, particularly in the goods and services account. 

The central bank has taken measures to support growth and address the country’s trade imbalances, including foreign exchange intervention and increased fiscal spending. 

However, the effectiveness of these measures remains to be seen.

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