Korea's central bank announced Thursday that it currently stands at US$2.6 billion in the red. This is the largest shortfall since January 1997, just before the Asian financial crisis.

The Bank of Korea explained that the country's deficit grew last month as import costs rose due to climbing oil prices.

The trade balance did a 180-degree turn in January, posting a shortfall of $1 billion from a W443 million overage the month before as the strong export market struggled to make up for the soaring import prices.

The last time Korea posted a trade deficit was five years ago in March 2003.

The service sector also saw losses of more than $2 billion last month as more Koreans increased spending overseas on travel and studies.

The amount of money Koreans have spent on overseas trips over the long Lunar New Year holiday in February is expected to have risen, raising concerns that this month's service account deficit will be even larger than January's.

Arirang News