S.Korea's current account surplus falls to 6-year low on record dividend payment

Source: Xinhua | 2018-06-06

South Korea's current account surplus fell to the lowest in six years on a record payment of dividend to foreign investors, central bank data showed Tuesday.

Current account surplus, the broadest measure of cross-border trade in goods and services, came in at 1.77 billion U.S. dollars in April, according to the Bank of Korea (BOK).

The current account balance stayed in black for 74 months since March 2012, but the surplus was the lowest in six years since April 2012.

The lower surplus came as domestic companies increased dividend payment to offshore investors amid the robust foreign purchase of stocks in the local market.

Primary income account, which gauges dividend and interest income as well as salary, posted a deficit of 5.86 billion dollars in April, the largest-ever deficit in the country's history.

Dividend payment to foreigners logged a record monthly high of 7.57 billion dollars in April. The dividend income account registered a record deficit of 6.51 billion dollars in the month.

The dividend payment usually falls in March and April, reducing the country's current account surplus on growing foreign investment in the local stock market.

The current account surplus was forecast to expand after the dividend-paying period, according to the BOK.

Trade surplus for goods declined to 10.36 billion dollars in April from 11.54 billion dollars a year earlier, contributing to the lower current account surplus.

Both exports and imports increased for the 18th consecutive month. Exports stood at 51.51 billion dollars on strong demand for semiconductors and global trade recovery. Imports came in at 41.15 billion dollars on higher crude oil price.

Services account balance recorded a deficit of 1.98 billion dollars in April, the lowest deficit since May last year.

The travel account deficit reduced to 1.09 billion dollars in April, the lowest since December 2016. The falling deficit came amid the rising number of Chinese tourists to South Korea.

The number of Chinese travelers to South Korea surged 60.9 percent in April from a year earlier. Foreigners visiting South Korea in the month rose at a lower rate of 23.8 percent than the Chinese tourists.

Travel income reached 1.43 billion dollars in April, the highest in 18 months since October 2016.

Financial account, which measures cross-border capital flow without transactions in goods and services, increased 10 million dollars in April.

Portfolio investment by local residents into foreign securities, such as stocks and bonds, grew 4.71 billion dollars in the cited month as local investors increased purchase of U.S. Treasury Bonds amid higher yield.

Investment by foreigners into domestic securities gained 770 million dollars as foreign investors raised holdings of local bonds.