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The current account balance for 2007 seems likely to swing to a deficit for the first time since the financial crisis of 1997. That's because the amount of money earned from exports is less than the amount of money spent overseas on dividend payouts, foreign travel and studying abroad, and that gap is widening.
On Thursday the Bank of Korea announced that the current account deficit for March reached US$1.49 billion (US$1=929). That puts the cumulative account balance for January to March at a shortfall of $1.52 billion.
The main reason the current account balance swung to a deficit in March is because of a jump in local companies' overseas dividend payments. As companies closed their books for last year, their payments to overseas investors totaled $2.85 billion for the month.
The income account, which is overseas dividend payments and wages earned by foreigners in Korea minus incoming dividends and wages earned by Koreans overseas, posted a deficit of $2.09 billion in March.
The trade account, which is income from exports minus payouts for imports, rose to a surplus of $2.5 billion in March, down $400 million compared to last March.
Because overseas travel and studies increased this year, the cumulative service account deficit for January to March reached $6.1801 billion. That nearly balances out the cumulative trade surplus ($6.1807 billion), meaning most of the money earned from exports is flowing out of the country through overseas travel and studies.
The problem is that the current account deficit will probably get worse next month considering that most dividend payments are sent in April.
Jeong Sam-yong, the head of the BOK's balance of payments statistics team, predicted that if the trade surplus continues, the current account balance will likely be a surplus of $2 billion for this year.
However most private researchers are forecasting a current account deficit for the year. Samsung Economic Research Institute predicted a deficit of $1.3 billion, LG Economic Research Institute predicted a $1.2 billion deficit, and Hyundai Economic Research Institute predicted a $3 billion deficit.
Chang Jae-chul, a senior economist at Samsung Economic Research Institute said, "The travel account deficit is already more than $1 billion a month even though it's not the summer vacation season yet. And with exports of chips, cell phones and other major key products slowing, it looks like the current account balance is likely to swing to a deficit."
(englishnews@chosun.com )
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