Helped by strong semiconductor exports, the current account recorded a $13.2 billion surplus in January, extending a run of surpluses to 33 consecutive months. However, overseas securities investment by residents also exceeded $13.0 billion, indicating sizable outflows. The impact of the U.S.-Iran war is expected to be limited for now, but there is also an assessment that a prolonged, intensifying conflict could affect the current account.

According to the provisional balance of payments for January released by the Bank of Korea on the 6th, the current account came to $13.26 billion (about 19.55 trillion won). This is the largest January figure on record and the fifth-largest on a monthly basis. With another surplus in January, the current account set a record of 33 consecutive monthly surpluses since May 2023.

A surge in exports relative to imports played a major role, expanding the goods surplus. The goods balance posted a surplus of $15.17 billion, about 4.5 times the level a year earlier ($3.35 billion). It was the third-largest monthly goods surplus on record.

On a customs-cleared basis, exports of information technology items such as semiconductors (102.5%) and wireless communication devices (89.7%) grew sharply, sending total exports up 30% year-on-year to $65.51 billion. Imports rose about 7% over the same period to $50.34 billion, a slower increase than exports. Lower energy prices at the time reduced imports of raw materials such as dairy products (-18.7%), crude oil (-12.8%), and gas (-12.5%).

The services balance registered a $3.8 billion deficit, with the travel balance in deficit by $1.74 billion, while the primary income balance showed a $2.72 billion surplus.

Despite policies to repatriate overseas assets, investment abroad by residents remained high. In the financial account, investment in overseas securities by residents amounted to $13.46 billion. Although the increase was smaller than in the previous month ($14.37 billion), it was still the third-largest on record.

Of that, investment by residents in overseas equities was $13.2 billion, with the increase larger than in the previous month ($11.83 billion). Brisk sentiment related to the U.S. stock market supported the rise, which was the second-largest on record.

Investment in overseas securities by foreigners was $4.69 billion, with the increase narrowing from the previous month ($5.68 billion), reflecting profit-taking sales amid a rise in the domestic stock market.

For now, the impact of the U.S.-Iran war has not been significant, but there are concerns that, depending on how the situation develops, it could also weigh on the current account.

Yoo Seong-uk, head of the Bank of Korea Financial Statistics Department, said, “Looking at past cases, when the duration of a conflict was not long, as with the 12-day Iran-Israel war last year, oil prices rose temporarily and then fell, so the impact on the current account was limited.”

He continued, “If it becomes prolonged, higher oil prices would increase import values and slow exports, potentially affecting the goods balance,” adding, “If transport disruptions occur in areas such as the Strait of Hormuz, freight rates could rise and affect the services balance as well, so close monitoring is needed.”