SEOUL (Reuters) – South Korea’s current account surplus surged to a record high in October as exports grew more than imports, official data showed on Thursday, underscoring still-weak domestic demand while adding to upward pressures on the won.
Asia’s fourth-largest economy posted a current account surplus of $7.92 billion in October on a seasonally adjusted basis, up sharply from a revised $4.93 billion surplus in September, the Bank of Korea data showed.
So far this year, the current account surplus has reached $58.26 billion before seasonal adjustment, on course for a record $63 billion surplus for the whole of the year as forecast by the central bank.
“The current account surplus will likely continue through next year, although the amount will decrease to 4 percent of gross domestic product from a 5 percent level (seen) this year,” said Suh Dae-il, an economist at KDB Daewoo Securities.
South Korea’s annual GDP product reached $1.13 trillion last year and will likely grow to nearly $1.2 trillion this year.
“The continued surplus will spur the won’s appreciation, although the won needs stronger economic growth to break above the 1,000 mark (per dollar),” he added.
The won is up only 0.9 percent against the dollar this year to date but its strength has stood out in the second half of the year, rising a whopping 7.6 percent since the end of June to end Wednesday’s onshore trade at 1,061.1.
Exports grew 4.4 percent from September to a record $50.17 billion on a seasonally adjusted basis, while imports rose by 1.9 percent to $43.92 billion, producing a goods account surplus of $6.25 billion, the central bank data showed.
Relatively weak imports reflected still-depressed domestic demand as households prefer to save more and pay back debt instead of spending on cars or homes.
South Korea’s economy is expected to pick up to annual growth of 2.8 percent from last year’s 2.0 percent and reach a robust 3.8 percent next year, although not quite the 4 percent that had been seen for some time.
South Korea has posted a current account surplus every month since early 2009.
Without adjustment for seasonal patterns, the current account surplus in October was $9.51 billion, also a record, up from $6.54 billion in September, the data showed.
On the financial account, South Korea saw a net outflow of $10.09 billion in October, compared to a net outflow of $4.54 billion in the previous month.
(Story was refiled to add missing word to headline)
(Editing by Eric Meijer)
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