South Korea recorded a $42.1 billion surplus in international trade in July, driven by strong semiconductor exports. This marks the second consecutive month that the surplus has exceeded $40 billion. Exports surpassed $100 billion for the second month in a row, following a historic first-time achievement in June.
According to preliminary statistics released by the Bank of Korea on September 4, the current account surplus for July was recorded at $42.08 billion, making it the second-largest surplus on record, following June's $49.73 billion. This marks the 39th consecutive month of surplus since May 2023, and it is the second-longest streak of surpluses since March 2019.
The goods balance led the current account surplus, with July's goods surplus reaching $40.43 billion, the second-largest ever recorded. The previous record was set in June at $47.89 billion.
Exports totaled $100.45 billion, a 65.3% increase compared to the same month last year. Following June's milestone, exports have continued to exceed $100 billion for two months. Notable increases were seen in the export of computer peripherals (344.5%), semiconductors (176.3%), and wireless communication devices (51.2%). Other categories, including petroleum products (35.7%), chemical products (19.1%), and steel products (11.3%), also saw growth.
Imports rose to $60.02 billion, a 21.7% increase. While imports of raw materials (29.1%) and capital goods (36.7%) increased, they did not keep pace with the growth in exports. Consumer goods imports decreased by 3.0%, marking the first decline in 15 months. Yoo Seong-wook, head of the Bank of Korea's financial statistics department, stated, "It is difficult to view the decline in consumer goods imports as a sign of consumption stagnation," adding that while there was a reduction in automobile imports, consumer goods imports have been on the rise again in August.
The services balance recorded a deficit of $190.7 million, as the number of outbound travelers increased during the peak travel season, leading to a negative travel balance for the first time in three months. The primary income balance showed a surplus of $4.35 billion, an increase from the previous month's surplus of $3.27 billion, driven by a rise in dividend income surplus to $3.83 billion from $2.56 billion.
The financial account net assets (assets minus liabilities) increased by $40.32 billion. Domestic investors' overseas securities investments rose by $13.57 billion, while foreign investments in domestic securities also turned positive with an increase of $8.17 billion. This was influenced by the issuance of American Depositary Receipts (ADRs) by SK Hynix in July. Foreign investments in domestic stocks increased by $5.98 billion, marking a return to net buying for the first time in six months.
From January to July, the cumulative current account surplus reached $233.09 billion. For the first half of the year, the current account surplus of $191 billion ranks second in the world, following China. This surpasses the surpluses of Germany ($115 billion), Japan ($122 billion), and Taiwan ($121 billion) from last year.
The Bank of Korea raised its annual current account surplus forecast from $250 billion to $450 billion in its economic outlook released in August. The achievement of this $450 billion surplus is expected to depend on the semiconductor market. Yoo noted, "If the current account maintains an average monthly surplus of around $43 billion over the next five months, achieving the projected $450 billion is possible," adding, "Currently, it seems somewhat achievable."
The impact of the recent decline in the won-dollar exchange rate on the current account is expected to be limited. The exchange rate recently fell to the 1,350 won range. Yoo explained, "While a decline in the exchange rate theoretically exerts downward pressure on the current account, the recent increase in goods exports, led by semiconductors, is influenced by supply and demand, so the impact of the exchange rate decline is limited."
* This article has been translated by AI.
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