After 75 months of service balance,
KDI “continued good manufacturing flow”
Rise in consumer sentiment and business index
GDP per capita in 2020 overtakes Italy
Last February, the current account recorded a surplus of $8.30 billion, continuing the trend of surplus for 10 consecutive months. The impact of strong exports, mainly in semiconductors and passenger cars, was large. It also played a part that the service balance turned to a surplus after 6 years and 3 months due to the soaring ship and air freight rates.
According to the’February 2021 International Balance (provisional)’ announced by the Bank of Korea on the 7th, the current account surplus of $8.03 billion in February, an increase of $1.63 billion from the same month last year. The current account recorded a deficit of $3.297 billion in April last year due to the new coronavirus infection (Corona 19), and after returning to a surplus of $2,241.2 million in May, it is recording a surplus for 10 consecutive months.
Korea’s current account, which is highly dependent on exports, has a surplus in the product balance, and the service balance, the main income balance, and the transfer income balance record a deficit, but this time the pattern has changed somewhat.
The current account surplus in February was also led by the commodity account. The scale of the commodity account surplus was $60.5 billion, a decrease of $550 million from the same month last year. Although exports increased significantly, the surplus narrowed slightly as imports also increased significantly. Exports in February were $47.71 billion, an increase of $3.76 billion from the same month last year. Income was $3.86 billion, an increase of $4.31 billion from the same month last year. Income increased by double digits (12.6%) for the first time since October 2018.
What catches the eye is the service balance. It turned from a deficit of $1.44 billion in the same month of the previous year to a surplus of $130 million last month. Since November 2014 (90 million dollars surplus), it has been in surplus after 6 years and 3 months. Thanks to the rapid rise in the shipping and air freight index, the transportation account turned back from a $20 million deficit in February last year to a surplus of $810 million in February this year. The scale of the main income account surplus increased from $1.22 billion in the same month last year to $2.12 billion last month due to the increase in dividend income. The transfer income balance showed a deficit of $260 million.
Even in the midst of the economic crisis caused by the spread of Corona 19, it was found that Korea’s economy was ranked 10th in the world and saved itself. In particular, Korea’s gross domestic product (GDP) per capita surpassed Italy for the first time. According to the Ministry of Strategy and Finance, Korea’s per capita GDP last year was $31,497, slightly surpassing that of Italy, one of the seven major countries (G7), of $31,288 per capita.
Meanwhile, the Korea Development Institute (KDI), a national research institute, also diagnosed that “the economic slowdown is easing” for the first time since August last year. In the’April Economic Trends’ published on the same day, KDI said, “Recently, the Korean economy has been showing that the economic sluggishness has eased as the manufacturing industry has maintained a good trend and economic sentiment has improved.”
In the World Economic Outlook released the day before, the International Monetary Fund (IMF) also predicted that Korea’s economic growth rate this year was adjusted to 3.6%, up 0.2 percentage points from the previous forecast. On this day, the Ministry of Science and Technology announced that based on the forecast of the IMF, the average growth rate of Korea in 2020 and 2021, which removed the underlying effects of the adverse growth caused by the Corona 19 shock last year, is expected to be 1.3%, far higher than the average growth rate of 0.2% in advanced countries.
Hong Nam-ki, Deputy Prime Minister of Economy and Minister of Equipment, said about the IMF’s economic outlook at the ’33rd Emergency Economic Central Countermeasure Headquarters Meeting’ held at the Gwanghwamun Government Complex in Seoul on the same day, “It means that our economy is one of the strongest and fastest recovering leading group countries. “As the US Biden administration’s massive stimulus measures are expected to have a significant ripple effect on the trading partners, Korea, which is highly dependent on foreign countries, will become one of the biggest beneficiaries of the recent strengthening of the global economic recovery.
Reporter Nam Jung-hoon, reporter Sejong=Park Young-jun reporter [email protected]
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