South Korea's Current Account Surplus Widens Amid US Tariff Pressure

(MENAFN- IANS) Seoul, July 4 (IANS) South Korea's current account surplus widened in May from a month earlier, despite falling exports, due mainly to falling global oil prices and an increase in dividend income, central bank data showed on Friday.

The country's current account surplus reached US$10.14 billion in May, following a surplus of $5.7 billion in April, according to the data compiled by the Bank of Korea, reports Yonhap news agency.

It marked the 25th consecutive month of a current account surplus, as South Korea has reported a monthly surplus since May 2023.

In terms of May figures, it was the third largest on record, following $11.31 billion of surplus in 2021 and $10.49 billion reported in 2016.

During the first five months of this year, the cumulative current account surplus stood at $35.11 billion, compared with $27.06 billion recorded during the same period last year.

The goods account logged a $10.66 billion surplus in May, as exports slid 2.9 percent from a year earlier to $56.93, while imports sank 7.2 percent on-year to $46.27 billion on falling imports of raw materials.

The services account, however, registered a $2.28 billion deficit in May due mainly to rising demand for overseas travel.

The primary income account, which tracks the wages of foreign workers, dividend payments from overseas and interest income, logged a $2.15 billion surplus in May, the data showed.

"The declines in exports and imports in May are largely due to such external factors as the global trade environment and falling oil prices," BOK official Song Jae-chang said during a press briefing.

"The impact of U.S. tariffs is becoming evident, particularly in automobiles and steel," Song added. "This effect is expected to become more pronounced in the second half of this year."

In April, U.S. President Donald Trump's administration began imposing reciprocal tariffs on partner nations, including 25 percent duties on South Korean goods, but the new tariff scheme was paused shortly afterward to allow for bilateral negotiations.

South Korea and the U.S. have agreed to pursue a "package" deal on trade and other related issues before July 8, when the 90-day pause on reciprocal tariffs is set to expire.

A separate 10 percent baseline tariff and 25 percent duties on steel, aluminum and auto-related products remain in place.

Trade Minister Yeo Han-koo is scheduled to visit the U.S. this week for last-minute negotiations.

-IANS

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