Surpassing Germany, Taiwan, and Japan—Only China Remains... Can the 450 Billion Dollar Current Account Surplus Be Achieved? 'Key Variable: Semiconductors'

South Korea’s Current Account Surplus Reaches $233.09 Billion from January to July
Surpassing Germany, Taiwan, and Japan in the First Half—Now Second Only to China
Surplus Forecast Sharply Raised to $450 Billion for This Year
Semiconductor

The accumulated current account surplus of South Korea from January to July reached 233.09 billion dollars. This is the result of a record-breaking surplus rally, with monthly figures approaching 50 billion dollars in June—the highest ever recorded—and again easily surpassing 40 billion dollars in July.

The provisional current account surplus for the first half of the year, 191 billion dollars, rose to second place in the world after China. South Korea overtook Germany, Taiwan, and Japan—all of whom had a greater surplus than South Korea last year—based on figures for the first half of this year.

According to the Bank of Korea's recently revised current account surplus forecast for this year, which was significantly raised to 450 billion dollars, South Korea must post an average monthly surplus of at least 43 billion dollars over the next five months to reach the target. The key variable is the semiconductor industry. With strong semiconductor exports expected to continue for the rest of the year, thanks in part to advance contract volumes, it is widely believed that the target is achievable as long as there are no major disruptions.

"Goods Exports Exceed 100 Billion Dollars for Two Consecutive Months"

According to the "July 2026 Balance of Payments (Provisional)" report released by the Bank of Korea on the 4th, South Korea's current account posted a surplus of 42.08 billion dollars in July. While this was down from the all-time high of 49.73 billion dollars the previous month, it was an increase of 30.13 billion dollars compared to the same period last year, marking the second highest monthly surplus on record and the highest ever for July. The current account has remained in surplus for the 38th consecutive month since May 2023, continuing the second-longest streak in history.

The main driver of this achievement was the goods balance, which accounts for the largest share of the current account. The goods balance posted a surplus of 40.43 billion dollars in July, setting both the second-largest monthly figure on record and the highest for a July. Generally, July goods balance figures experience a seasonal dip compared to June as export companies focus on half-year sales performance, creating a base effect.

Nevertheless, thanks to the strong performance in semiconductors, monthly goods exports in July reached 100.45 billion dollars, surpassing 100 billion dollars for the second consecutive month. This is a 65.3% increase year-on-year. In July, exports of IT-related items rose by 140.6% year-on-year, while non-IT exports grew by 18.3%. Within the IT category, there were notable increases in computer peripherals and SSDs (344.5%), semiconductors (176.3%), and wireless communication devices (51.2%). In non-IT, increases were seen for petroleum products (35.7%), chemical products (19.1%), steel products (11.3%), machinery/precision equipment (8.4%), and passenger cars (8.4%).

Goods imports totaled 60.02 billion dollars. Imports of raw materials grew by 29.1% and capital goods by 36.7%, but consumer goods fell by 3.0%, the first decline in 15 months, resulting in a smaller overall increase in imports.

Export and import cargo are piled up at Busan Port Sinsundae Wharf in Nam-gu, Busan. Photo by Yonhap News.

Number of Departures Rises During Summer Vacation Season... Travel Account Turns to Deficit After Three Months

The services account recorded a deficit of 1.97 billion dollars. While telecommunications, computer, and information services improved, the travel account turned to a deficit of 340 million dollars, widening the overall deficit. Driven by the peak overseas travel season and the designation of Constitution Day as a public holiday, the number of outbound travelers increased, causing the travel account to register a deficit for the first time in three months.

The primary income account posted a surplus of 4.35 billion dollars, with the dividend income account posting a surplus of 3.83 billion dollars and boosting the overall surplus. Here too, strong semiconductor performance played a role. As operating profits of overseas sales subsidiaries of semiconductor companies increased, dividend income from direct investment expanded the surplus.

Net financial assets, calculated as assets minus liabilities, rose by 40.32 billion dollars. Although this was a smaller increase than the previous month, it was still the second-highest on record. For direct investment, overseas investment by Korean residents increased by 3.36 billion dollars, while foreigners' direct investment in Korea decreased by 780 million dollars. In securities investment, overseas securities investment by Koreans, primarily in stocks, increased by 13.57 billion dollars, and foreign investment in Korean securities also rose by 8.17 billion dollars. The rise in foreign stock investment was driven by the issuance of SK hynix ADRs in the United States. Reserve assets decreased by 1.8 billion dollars.

(from left) Junyoung Kim, Manager of the Balance of Payments Team at the Bank of Korea, Sungwook Yoo, Head of the Financial Statistics Department, Seonggon Park, Head of the Balance of Payments Team, and Yeonbin Lim, Manager of the Balance of Payments Team, are answering reporters' questions at the July 2026 Balance of Payments (Provisional) briefing held on the 4th at the Bank of Korea in Jung-gu, Seoul. Photo by Bank of Korea

Expectations for a 450 Billion Dollar Current Account Surplus—Key Is Semiconductor Industry

On July 27, the Bank of Korea substantially raised its projection for this year's current account surplus from 250 billion dollars to 450 billion dollars in its revised economic outlook. To reach this target, a further surplus of at least 216.91 billion dollars, or an average of 43.38 billion dollars per month, is required over the next five months.

The trend so far has been positive. In the first half of the year (January to June), South Korea's provisional current account surplus was 191 billion dollars, ranking second in the world after China. South Korea surpassed the first-half surplus amounts posted this year by Germany, Taiwan, and Japan (which were respectively 124.1 billion, 121 billion, and 110.3 billion dollars). According to customs statistics, semiconductor exports in August reached a record monthly high of 46.65 billion dollars.

Sungwook Yoo, head of the Financial Statistics Department at the Bank of Korea's Economic Statistics Bureau 1, emphasized, "The major variable that will determine whether the annual forecast is met is the semiconductor industry." He added, "The figure of 191 billion dollars in the first half was exceptionally strong. In international comparisons, South Korea was second only to China. At this point, it seems that the outlook is reasonably favorable." He also cited the situation in the Middle East as a variable. Yoo commented, "Uncertainty related to the Middle East conflict will likely have a significant effect on imports of raw materials, but as alternative imports are increasing, the impact is expected to be limited compared to semiconductors."

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