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South Korea posted a record monthly current account surplus in March on the back of imports again contracting faster than exports.

The Bank of Korea (BOK) reported Wednesday that the surplus widened significantly to $6.65 billion in March from February's $3.56 billion, bringing the first-quarter total to $8.6 billion, compared with a $3.8 billion deficit recorded during the same period last year.

This was the largest monthly surplus since January 1980 when the BOK began tracking related data. The current account is the broadest measure of cross-border trade.

The upside surprise came as the merchandise trade surplus jumped by $3.87 billion to an all-time high of $6.98 billion last month, with imports dipping more steeply than exports.

Imports dropped by 35.8 percent in March year-on-year, compared with a 30.6 percent fall the previous month, while exports declined 17.8 percent, a slight improvement from a 19.4 percent drop in February.

Market analysts said that the surplus is expected to continue.

``The BOK said that the balance is expected to record a $3 billion surplus in April, but the upside risk looks quite high,'' JP Morgan economist Lim Ji-won said.

``The black-ink may peak in either March or April and decline thereafter. But the surplus trend will persist throughout this year,'' she added. ``I think the economy has bottomed out in the first quarter and will sustain positive growth from the second quarter.''

However, some economists counter that the record surplus should not be taken as an indicator of an economic upturn.

By Kim Jae-kyoung (Staff Reporter)



# The Korea Times [APRIL 30 2009]