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Economy

South Korea reports first current-account deficit in 7 years

Slowdown of cross-border trade hit April's numbers hard

Giant cranes of Hyundai Heavy Industries loom over docks in Ulsan, South Korea. The country's trade surplus narrowed to $5.67 billion in April, down 41% from the year before.    © Reuters

SEOUL -- South Korea's current account balance fell into the red in April, for the first time in seven years since April 2012, reflecting the decrease in its exports due to the slowdown in cross-border trade.

According to data announced by the Bank of Korea on Wednesday, the country's current account balance, which indicates trade in goods and services with overseas, plunged to a $660 million deficit. The data for April 2018 recorded a $1.36 billion surplus.

The country's trade surplus, or exports minus imports, narrowed to $5.67 billion in April, down 41% from the year before. While exports sagged by 6% partly because of lower prices for semiconductors, one of South Korea's main export goods, its imports increased by 2%.

Raw materials including crude oil surged, on top of the increase in imports of consumer goods, such as household appliances.

Its balance on income recorded a $4.33 billion deficit. Although the amount of deficit was down 23% from the previous year, it increased as much as sixfold compared to the previous month. April generally sees a deficit on income, as companies that finish their fiscal year in December tend to pay dividends to foreign investors.

The decrease in trade surplus due to the cool-down in South Korea's exports could not cover the deficit for the current account balance.

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