Credit: Public domain.
According to a preliminary report by the Bank of Korea 한국은행 issued on March 10, South Korea’s current account balance, or the sum of all transactions made between South Korea and foreign countries, was negative USD 4.5b for January 2023 - a record deficit for a single month.
The trade deficit for goods of USD 7.5b, also a record, was the largest reason for the overall account deficit. South Korea saw trade deficits four months in a row - a streak unseen since the 1997 East Asian Financial Crisis. The balance of service, or the money that South Korea earned by selling services such as tourism set against the money South Koreans spent on foreign services, also faced a deficit of USD 3.3b.
The only bright spot was the balance of current transfers, typically referring to investment income earned overseas by a South Korean national and returned to South Korea. In January, the balance of current transfers was USD 6.4b, an increase of USD 4.5b year-over-year. Such transfers, however, do not have a significant positive impact on economic production, as they are largely the result of Korean corporations collecting profits generated by their international subsidiaries.