South Korea's current account surplus to reach USD84bn in 2016

SouthKorean government's efforts to recycle the current account surplus more aggressively are bearing fruit. On the external balance, the current account surplus remains elevated - the cumulative surplus for the first seven months of 2015 added up to USD62.4bn. 

"With only five months of the year remaining, we continue to forecast a current account surplus of USD95bn in 2015 (BoK: USD98bn; 2014: USD89.2bn) and USD84bn in 2016 (BoK: USD88bn)", says Barclays. 

Interestingly, the capital and financial account deficit (ex-reserves) increased significantly for a third straight month in July, widening to USD11.6bn from USD9.5bn in June (May: -USD5.9bn Apr: -USD6.7bn). 

This was driven by a larger deficit of USD6.5bn in the portfolio investment account (June: -USD10.5bn; May: -USD0.4bn; Apr: -USD0.1bn) on the back of net outflows - largely from foreign investment portfolios. The USD6bn sale of Tesco's Homeplus operations in Korea to a Korean-led consortium (finalised in early September) will also add to net FDI outflows, added Barclays.