×

South Korea Post Biggest Trade Deficit in 11 Years

South Korea posted its biggest monthly current account deficit in almost 11 years in January as the goods trade account swung to a deficit while the services account deficit rose, central bank data showed on Thursday.

The seasonally adjusted current account deficit widened to a provisional $2.03 billion in January, the biggest since a $2.21 billion deficit in February 1997, from a revised $1.07 billion
deficit in December 2007, the Bank of Korea data showed.

The worsening current account performance is negative to the won already on a gradual decline against the dollar since hitting a decade high at the end of October last year.

The merchandise trade account posted its first monthly deficit in almost five years in January, swinging to a $59 million loss from a $933 million surplus in December, as higher raw materials prices inflated the import bills.

The merchandise trade account figures included in the current account data is calculated on a balance-of-payment basis and different from the Commerce Ministry's figures calculated on a
customs-clearance basis.

The services account deficit widened to a $1.53 billion deficit in January from a $1.23 billion loss in December last year as the won's past appreciation encouraged South Koreans to spend more studying and travelling abroad.

The data, which was released before local financial markets started trading, is adjusted for seasonal patterns and January figures are provisional while December 2007 numbers were revised.

The Bank of Korea has already forecast the country's current account for the whole of 2008 would suffer its first annual deficit of $3 billion in 11 years.