South Korea August current account: more recycling of the surplus

The current account narrowed to USD8.5bn in August (July: USD9.3bn; June: USD12.1bn), sharply above the forecast of USD6.5bn. The reasons for the smaller surplus were consistent with the previous month - a narrowing in the goods balance and the primary income surplus that offset continued improvement in the services deficit. The deficit in the services account narrowed to USD1.3bn in August from USD1.9bn in July, as the travel and financial services deficits shrank. 

With the YTD surplus at USD70bn with four months left in the year, the current account surplus is expected to reach USD95bn in 2015 (BoK: USD98bn; 2014: USD89.2bn) and USD84bn in 2016 (BoK: USD88bn). It is now clear the government's efforts to push out the current account surplus are working. The financial and capital account (excluding reserves) recorded a cumulative deficit of USD64bn, of which more than half was recorded in the three months between June and August (USD33bn).