S. Korea Posts Current Account Surplus, But Growth Falters

The services account deficit widened to a record high last year, while the goods account surplus posted the second largest record on brisk exports, but concerns are rising over signals of weakening economy.

According to preliminary data by the Bank of Korea on Monday, the country’s services account deficit came to a record high of 34-point-five billion dollars last year, KBS reported.

The drop is attributed to a deficit in the travel account due to China’s retaliation against the deployment of the THAAD antimissile system and the growing number of South Koreans going abroad for trips.

Last year, the country’s travel account deficit also posted a record $17.2 billion. In contrast, the goods account marked a surplus of $119.9 billion, the second largest figure after 2015 when it came to $122.3 billion.

The country’s current account came to a surplus of $78.46 billion last year, marking the 20th consecutive year to post a surplus since 1998.

Construction orders decreased 17% in the fourth quarter of last year from the same period of 2016 after recording a 10.9% fall in the preceding quarter. The average factory operation rate remained at 70.4% in December, the lowest since August 2016, when the figure was at the same level.

For all of 2017, the rate stood at 71.9%, the lowest since 1998 in the aftermath of a devastating foreign exchange crisis, when factories ran 67.6% on average of full capacity.

Construction orders decreased 17% in the fourth quarter of last year from the same period of 2016 after recording a 10.9% fall in the preceding quarter. The average factory operation rate remained at 70.4% in December, the lowest since August 2016, when the figure was at the same level.

For all of 2017, the rate stood at 71.9%, the lowest since 1998 in the aftermath of a devastating foreign exchange crisis, when factories ran 67.6% on average of full capacity. Industrial production as a whole rose 0.2% in December from a month earlier, decelerating from a 1.3% gain in November.

The output increase was attributed mainly to a rise in the service sector production, which came despite a slump in retail sales.

Production in the service sector increased 0.2% on-month in December, with retail sales sinking 4%, compared to a 5.7% gain in the previous month.

Policymakers hope Asia’s fourth-largest economy will continue to grow over 3% this year following a 3.1% expansion last year.