Concerns Rise as Current Account Barely Maintains Surplus Amidst Sluggish Exports and Domestic Demand

Current Account Surplus Maintained Despite Slow Exports

In the second half of the year, the current account balance maintained a meager surplus as imports fell more than exports. The Bank of Korea has reassured that the economy is showing signs of improvement and is not in a recession. However, concerns are growing over the sluggishness in exports and domestic demand.

Exports Struggle, Imports Fall

In July, the current account balance barely maintained a surplus, with exports continuing to face challenges. However, the decline in imports prevented a deficit from occurring. Despite criticism labeling this surplus as resembling a recession, the Bank of Korea firmly stated that the economy is indeed improving.

The Bank’s Director of Financial Statistics, Dong-Won Lee, stated on August 8th, “When the fourth quarter arrives, we expect to see a positive growth rate in exports. Our economy is currently in a phase of recovery, not a slump.”

Market Skepticism Amidst Uncertain Exports

Although the government predicts that our economy will recover from recession in the second half of the year, the market sentiment remains cautious. The lack of clear signs indicating a rebound in exports, compounded with various variables originating from China, our largest trading partner, has contributed to the uncertain atmosphere. Professor Byung-Hoon Seok from Ewha Womans University stated, “If China starts to regulate the use of iPhones due to the ongoing US-China trade conflict, domestic electronic companies such as Samsung Electronics may suffer setbacks in sales growth. The possibility of export rebound in the second half of the year is diminishing.”

Challenges in Domestic Demand

Boosting domestic demand, another vital pillar of our economy, is proving to be no simple task. In July, private consumption experienced its largest decline in three years. Consequently, imports of consumer goods including passenger cars and household appliances have also significantly decreased. The sudden drop in imports, which has been supporting the current account surplus, cannot be celebrated. Booyoung Lee, Head of the Trend Analysis Team at Hyundai Economic Research Institute, observed, “The import amount of consumer goods can be used as an indicator to assess economic conditions, especially in the retail industry. Currently, the retail industry is performing poorly, which raises concerns about consumer spending.”

Rising Oil Prices Fuel Inflation Concerns

The recent surge in international oil prices has also raised fears of increasing inflation, casting doubt on the prospects of an economic rebound in the second half of the year.

With uncertainties surrounding both exports and domestic demand, the road to a robust economic recovery remains challenging.


As imports fell more than exports, the current account barely maintained a surplus for the first time in the second half of the year.

The Bank of Korea stressed that the economy is improving and not in recession, but concerns are growing about sluggish exports and domestic demand.

This is reporter Hyeong-won Lee.


The current account balance in July, released for the first time in the second half of the year, barely maintained a surplus.

Exports were still slow, but imports fell so much that we barely avoided a deficit.

In response to criticism that it was a recession-like surplus, the Bank of Korea drew a line, saying the economy was improving.

[이동원 / 한국은행 금융통계부장 (지난 8일) : 4/4분기 되면 수출 증가율이 플러스로 전환될 것으로 지금 보고 있습니다. 경기가 둔화하고 있다가 지금 회복되는 상황이지 우리 경제가 지금 불황에 빠진 상황은 아니다….]

The government’s prediction is that our economy will come out of recession in the second half of the year as exports improve.

However, the market atmosphere is not good.

This is because there are no clear signs that exports have started to rebound due to variables originating from China, the largest trading country.

[석병훈 / 이화여대 경제학과 교수 : (미·중 갈등으로) 중국에서 아이폰 사용을 규제하기 시작하면서 애플에 납품하는 국내 삼성전자 등 전자업체들 역시 매출 증대에 타격을 받을 가능성이 커졌습니다. 하반기에 수출이 반등할 가능성은 점점 낮아지고 있습니다.]

Domestic demand, another economic aid, is not easy either.

Private consumption fell in July by the most in three years.

Due to the fall in consumption, imports of consumer goods such as passenger cars and household appliances have also fallen significantly.

We cannot welcome the sudden drop in imports that supported the current account surplus.

[이부형 / 현대경제연구원 동향분석팀장 : (소비재 수입액은) 도소매업 중심으로 해서 경기를 판단해 볼 수 있는 그런 지표가 되겠죠. 지금 도소매업 굉장히 안 좋잖아요. 그런 걸 보면 소비 많이 불안하죠]

In particular, the recent surge in international oil prices has raised concerns about rising inflation, raising warning lights for an economic rebound in the second half of the year.

This is YTN Lee Hyeong-won.

Video Editing: Heejeong Kim
Graphics: Yoo-dong Park

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