Bank of Korea Sharply Raises Current Account Forecast... USD 450 Billion This Year, USD 430 Billion Next Year

Surging Semiconductor Demand and Supply Constraints Drive Price Spikes
Goods Account Surplus Projected at USD 467.2 Billion This Year and USD 458.9 Billion Next Year

The Bank of Korea has projected this year's current account surplus to reach USD 450 billion. This would be the largest surplus in history, nearly four times last year's previous record of USD 123.1 billion. The Bank also forecasts that next year's surplus will remain elevated at USD 430 billion, comparable to this year's estimate.

On August 27, in its August economic outlook, the Bank of Korea forecast the current account surplus to be USD 450 billion for this year and USD 430 billion for next year. This marks a sharp upward revision from its previous forecast in May, which was USD 250 billion for this year and USD 190 billion for next year.

The Bank stated, "The cumulative current account surplus for the first half of this year already reached USD 191 billion, surpassing last year's annual figure of USD 123.1 billion." It added, "Going forward, the goods account is expected to post a large-scale surplus, buoyed by the surge in semiconductor demand due to expanding global artificial intelligence (AI) investments and the resulting price spikes caused by supply constraints."

The goods account surplus is expected to reach USD 467.2 billion this year, nearly double the May forecast of USD 267.2 billion. The Bank explained that this large surplus is attributed to rising demand for semiconductors fueled by a global expansion in AI investments, as well as sharp price increases due to supply constraints. For next year, the goods account surplus is also expected to exceed USD 450 billion (specifically, USD 458.9 billion).

The services account, meanwhile, is projected to record a deficit of USD 37 billion, with the deficit widening compared to last year (USD -34.5 billion). The Bank of Korea said, "Although there has been a favorable trend in foreign tourist arrivals, the deficit in the services account is expected to widen slightly due to increased payments for overseas intellectual property rights, which are a result of the boom in the IT manufacturing sector."

However, the Bank of Korea cautioned, "There remains considerable uncertainty regarding the future trajectory of semiconductor prices, and as such, both upside and downside risks to these forecasts are significant."

This content was produced with the assistance of AI translation services.