Korea’s account surplus reaches USD 7.9bn in July

Solid goods trade balance expected until year-end.

In Korea, following the recent release of July balance of payments data, the current account surplus remained very steady compared to the previous month, at USD 7.9bn.

According to a research note from DBS, with the surplus accumulating USD 47bn in the first seven months of this year, the full-year CA number should be easy to reach DBS’ forecast of USD 69bn (4.7% of GDP).

Goods trade balance is expected to remain strong in the remaining months of this year as the recovery in exports proceeds and oil import prices retreat.

Here’s more from DBS:

On the other hand, the deficit of the financial account narrowed notably to USD 3.1bn in July from USD 6.0bn in June.

Inward portfolio investment in equities increased USD 3.9bn, sustaining positive flows for the fourth consecutive month since April.

By contrast, foreign investment in debt securities registered outflows for the third month in a row (USD 1.5bn).

The process of portfolio reallocation from bonds towards equities is expected to continue in the months ahead, amid rising expectations about Korea's growth recovery and fading expectations about BOK rate cuts.