South Korea March current account surplus halves

[SEOUL] South Korea's seasonally-adjusted current account surplus halved in March to US$5.07 billion from a US$10.01 billion surplus in February, central bank data showed on Thursday, to mark the smallest surplus since November 2013.

The result was largely due to a reduced goods surplus as imports surged 7.6 per cent to US$40.71 billion while exports fell 2.2 per cent to US$49.53 billion, the Bank of Korea said.

The resulting goods surplus in March was US$8.82 billion, down from a surplus of US$12.84 billion.

The current account surplus in non-adjusted terms in March stood at US$5.93 billion, compared to an US$8.40 billion surplus in February.

South Korea has been aiming to reduce its massive current account surplus by encouraging local investors move money overseas in order to avoid possible accusations from the United States that it is a currency manipulator.

A US trade and customs enforcement law enacted last year set out three criteria for identifying manipulation among major trading partners: a "material" global current account surplus, a "significant" bilateral trade surplus with the United States, and persistent one-way intervention in foreign exchange markets.

Thursday's data also showed the services account sustained its biggest-ever deficit in March at a seasonally adjusted US$3.81 billion because of a record US$1.66 billion deficit in the travel balance.

The services account has been in deficit since January 2015.

The central bank said March's services account deficit was created by reduced inward tourism because China had banned group tours to South Korea in retaliation against the deployment of the US Terminal High Altitude Area Defence (Thaad) anti-missile system.

China has officially denied its actions are related to the Thaad deployment but strongly criticises the system's deployment in South Korea, believing its powerful radar can penetrate Chinese territory.

South Korea and the United States have repeatedly said Thaad is aimed solely at curbing North Korea.

The Hyundai Research Institute said South Korea's economy could sustain up to 8.5 trillion won (S$10.48 billion) in economic losses because of China's measures against Thaad this year, with losses focused on tourism and cultural industries.

REUTERS