South Korea's current account surplus tops Germany and Japan combined for the first time, driven by semiconductor exports

[Financial News] South Korea's current account surplus in the second quarter of this year exceeded the combined surplus of Germany and Japan for the first time. With semiconductor exports remaining strong amid the spread of artificial intelligence (AI), South Korea's current account surplus rose to the world's second-largest, behind China's. The International Monetary Fund (IMF) projected that South Korea would post the world's largest increase in its annual current account surplus this year among 190 countries.
According to IMF statistics carried in the Bank of Korea's Economic Statistics System on the 25th, South Korea's current account surplus in the second quarter of this year totaled $116.63 billion. That was the second-largest among 36 major economies, behind China ($193.72 billion).
During the same period, Germany and Japan recorded current account surpluses of $52.28 billion and $50.62 billion, respectively. South Korea's surplus was $13.74 billion greater than the combined $102.89 billion of the two countries. It was the first time since the first quarter of 1996, the earliest period for which data are available for all three countries, that South Korea's current account surplus exceeded the combined total for Germany and Japan.
South Korea's Q2 surplus surged to 4.1 times the level in the same period last year ($28.39 billion). By contrast, Germany and Japan posted growth rates of just 11.9% and 5.0%, respectively. South Korea also ranked second in the first-half cumulative surplus, at $191.01 billion, behind China ($378.03 billion).
The trend continued into the third quarter. In the two months of July and August, South Korea's current account surplus totaled $88.19 billion, exceeding the combined $80.82 billion surplus of Germany and Japan by $7.37 billion.
According to the October World Economic Outlook (WEO) published by the IMF, South Korea's annual current account surplus is projected to reach $421.946 billion this year. It ranks second among the 190 countries and regions for which statistics are compiled, behind China ($863.205 billion), up three places from last year.
South Korea's current account surplus is forecast to increase by $298.892 billion, the largest increase in the world. The current-account-surplus-to-GDP ratio is also projected to reach 18.8%, its highest level since related statistics began being compiled in 1980.
The Bank of Korea also said in its Economic Situation Assessment report on the 22nd that “the current account surplus will continue at a high level, exceeding the initial forecast of $450 billion for the year, thanks to strong semiconductor exports.” This has also prompted speculation that the annual surplus could approach $500 billion.
The key factor driving the expansion of the current account surplus is semiconductor exports. According to the National Data Agency, semiconductor exports totaled $113.89 billion in the second quarter of this year, up 181.6% from the same period a year earlier. In the third quarter, they reached $148.02 billion, with growth hitting 218.7%. Memory semiconductor exports in particular surged 311.6% to $130.7 billion.
However, there are also calls for caution about the export structure's concentration in semiconductors. Since export growth could weaken if the AI investment boom cools or competing countries expand their semiconductor supply, it is argued that medium- to long-term responses, including industrial diversification and restructuring, are needed.

[email protected] Im Su-bin Reporter