South Korea’s current account surplus surges to record on chips

[SEOUL] South Korea’s current-account surplus surged to another record in March, driven by a surge in semiconductor exports and stronger shipments across Asia and the US, even as foreign investors sharply reduced holdings of domestic stocks amid rising Middle East tensions.

The current-account surplus reached US$37.3 billion in March, the largest monthly surplus on record, according to Bank of Korea (BOK) data released on Friday (May 8). The figure far exceeded the previous record of US$23.2 billion set in February, and marked the country’s 35th straight month of current-account surpluses, the second-longest streak of surpluses since the 2000s, the BOK said.

The goods balance posted a record US$35.1 billion surplus as exports surged to an all-time high of US$94.3 billion. That was led by semiconductors and computer-related products, while petroleum products and chemicals also climbed as higher oil prices boosted shipment values. Chip exports jumped nearly 150 per cent on a customs-clearance basis, the BOK said.

Meantime, imports increased by the most in 15 years.

The data underscore how South Korea’s trade sector continued to benefit from resilient artificial-intelligence demand before broader fallout from the Iran war and heightened geopolitical tensions began weighing heavily on financial markets and investor sentiment.

The services account posted a US$1.3 billion deficit, though the shortfall narrowed from both a year earlier and the previous month. The travel account returned to a surplus for the first time since late 2014, aided by seasonal domestic tourism demand during the spring travel period.

SEE ALSO

Top Bank of Korea official says it’s time to consider rate hike

Bank of Korea’s new chief signals flexible policy amid oil risks

South Korea holds rates steady as Iran war fans inflation, growth risks

Bank of Korea flags financial stability risks as Iran war fallout persists

More

Asean Intelligence

Get insights into businesses across South-east Asia

Get the free report

The primary income account surplus widened to US$3.58 billion, supported by increased dividend income from direct and portfolio investments.

The financial account showed a net asset increase of US$37 billion. South Koreans continued investing abroad, while foreign investors drastically reduced holdings of South Korean equities.

Meanwhile, foreign investment in domestic stocks fell by a record US$29.3 billion as escalating Middle East risks and concerns about weakening memory demand fuelled profit-taking, according to the BOK. BLOOMBERG