Current account posts surplus for 25th straight month, but ‘impact of U.S. tariffs beginning to show'

The central bank said on Friday that both South Korea's exports and imports are declining — but with inbound shipments dropping more sharply, the current account stayed in surplus.

However, exports are expected to take a bigger hit soon when new tariffs kick in.

Our Kim Do-yeon reports.

South Korea's current account remained in the black in May for the twenty-fifth consecutive month logging a current account surplus of ten-point-one billion U.S. dollars.

According to the Bank of Korea on Friday, the figure is nearly double that recorded in April possibly due to a slower rise in oil prices and the reduced imports.

The central bank added that while this was the third-largest surplus on record for the month of May, exports fell for the first time in four months as autos and steel struggled under U.S. tariffs.

The goods account surplus widened from the previous month, as imports decreased more sharply — due to falling oil prices — than exports, which saw declines mainly in non-IT products.

Specifically the goods account recorded a 10.66 billion dollar surplus, although exports decreased by 2.9% to 56.93 billion dollars, as

imports decreased by a larger margin of 7.2% to 46.27 billion dollars, compared to last year.

When both decline it could be a sign of recession, but the BOK explained that this was not a domestic issue.

Regarding the falling exports, when U.S. tariffs come into effect, the results will be clearer, especially with certain export items that South Korea relies on.

"In the case of automobiles, the impact is expected to become more pronounced in the second half of the year. As local production expands, exports from Korea to the U.S. could decline to some extent."

Meanwhile from January to May this year, the cumulative current account surplus stood at 35-point-11 billion dollars, up eight-point-0-5 billion dollars from the same period last year.

Kim Do-yeon, Arirang News.