S. Korea`s current account deficit hits record high in August

SEOUL, Sept. 30 (Yonhap) -- South Korea's current account deficit reached a
record high in August as the trade shortfall widened to a 12-year high, the
central bank said Tuesday.

The current account shortfall reached US$4.71 billion in August, up from a
revised $2.53 billion deficit the previous month, the Bank of Korea (BOK) said in
a report.
The current account is the broadest measure of trade, service and investment
flows into and out of the country.
The country had posted shortfalls for the sixth straight month since December,
marking the longest red-ink streak since the 1997 Asian financial crisis.
A widening shortfall of the current account, coupled with rising overseas debt
and a selling spree of local stocks by foreign investors, is putting downward
pressure on the already-weakening local currency.
The won tumbled to a 57-month low against the U.S. dollar on Monday, dipping to
1,200 won at one point. The won has declined more than 21 percent against the
U.S. dollar so far this year.
The trade balance posted a deficit of $2.82 billion in August, a turnaround from
a revised $217.6 million surplus the previous month. The August deficit was the
largest since August 1996 when the shortfall amounted to $3.59 billion.
Customs-cleared exports grew 18.7 percent year-on-year to $36.8 billion last
month and imports expanded 37 percent to $40.6 billion, according to the central
bank.
The price of Dubai crude, South Korea's benchmark, jumped 67.6 percent in August,
compared with a year earlier. South Korea, the world's fifth-largest crude buyer,
relies entirely on imports for its oil needs.
The shortfall of the service account, which includes South Korean spending on
overseas trips, narrowed to $2 billion in August, compared with $2.46 billion a
month earlier.
The income account, which tracks wages for foreign workers and dividend payments
overseas, logged a surplus of $324.8 million last month, down from $239.6 million
in July.
The capital account, which tracks cross-border investments, recorded a net inflow
of $5.33 billion in August, compared with a net outflow of $5.77 billion a month
earlier. The July figure marked the largest net outflow since December 1997 when
the county saw a net outflow of $6.37 billion.
In early July, the central bank revised upward its forecast of the annual current
account shortfall to $9 billion, from its initial prediction of $3 billion, the
first deficit since 1997.
But the BOK said that the size of the expected annual shortfall is not that
worrisome as it makes up less than 1 percent of the economy.