South Korea's Q2 Current Account Surplus Exceeds 'Germany and Japan Combined' for First Time

First-half current account surplus reaches $191 billion, ranking second behind China
July-August surplus also exceeds combined total for Germany and Japan

South Korea’s current account surplus in the second quarter of this year was larger for the first time than the combined surpluses of Germany and Japan, both major manufacturing powers. The increase came as a boom in semiconductor exports drove a sharp expansion in the trade surplus. The International Monetary Fund (IMF) forecast that South Korea would rank second behind China in annual current account surpluses this year and post the largest increase among 190 countries worldwide.

According to the Bank of Korea’s Economic Statistics System on Oct. 25, the IMF put South Korea’s current account surplus in the second quarter of this year at $116.33 billion. That was the world’s second-largest, behind China’s $193.724 billion. South Korea’s surplus was $13.74 billion greater than the combined surpluses of Germany, in third place at $52.276 billion, and Japan, in fourth at $50.615 billion.

It was the first time since the first quarter of 1996, when figures for all three countries are available, that South Korea’s current account surplus exceeded the combined total for Germany and Japan. The gap with Germany was $64.35 billion, the widest since records began in 1976. South Korea’s surplus was $66.01 billion greater than Japan’s, the widest gap since 1996, the earliest year for which comparable figures are available.

This came as South Korea’s surplus in the second quarter of this year rose 310.9% from $28.39 billion in the same period last year, while Germany’s and Japan’s surpluses increased by 11.9% and 5.0%, respectively.

Yonhap News Agency

For the first half of the year as a whole, South Korea’s current account surplus also ranked second, at $191.01 billion, behind China’s $378.03 billion. Germany followed at $126.39 billion, then Japan at $112.12 billion, Norway at $55.32 billion, Switzerland at $51.03 billion and the Netherlands at $50.54 billion.

The trend continued in the third quarter. South Korea’s current account surplus in July and August totaled $88.19 billion, exceeding the combined $80.82 billion recorded by Germany ($36.85 billion) and Japan ($43.97 billion) by $7.37 billion.

South Korea is also forecast to post a record annual current account surplus. In its October World Economic Outlook, the IMF projected the country’s surplus for this year at $421.946 billion. The increase from the previous year is expected to be about $298.9 billion, more than twice China’s projected increase of about $138.8 billion. The current account surplus is also forecast to equal 18.8% of gross domestic product (GDP) this year, its highest level since 1980. The Bank of Korea expects a larger surplus than the IMF forecast. Bank of Korea Governor Shin Hyun-song said at a press conference after the Monetary Policy Board’s meeting on Oct. 22 that this year’s surplus would exceed the Bank’s August forecast of $450 billion.

A surge in semiconductor demand amid a global boom in artificial intelligence (AI) investment has helped drive strong semiconductor exports by Samsung Electronics and SK hynix, contributing to this year’s larger current account surplus. Bolstered by a sharp rise in semiconductor prices, memory semiconductor exports in the third quarter reached $130.7 billion, up 311.6% from the same period last year. Some observers, however, argue that rather than assume the export-driven surplus will last, South Korea should work to strengthen the foundations for future growth. The IMF forecasts that South Korea’s current account surplus will remain above $400 billion next year and in 2028, but then decline to $295.656 billion in 2029 and $177.491 billion in 2031.

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