Posted on : May.26,2006 10:33 KST

South Korea recorded a current account deficit in April for a third consecutive month as the income account deficit widened due to increased overseas dividend payments, the nation's central bank said Friday.

The current account deficit reached US$1.5 billion last month, compared with a revised shortfall of $426.8 million in February and $782.8 million in March, the Bank of Korea said in a preliminary report.

The current account is the broadest measure of trade, service and investment flows into and out of the country. It is the first time since the end of 1997 that the balance has marked a shortfall for three straight months. The April deficit is also the largest shortfall since April 1997, when it stood at $1.6 billion.

"Companies that close their books in December paid dividends to overseas investors, causing a shortfall worth $1.9 billion in the income account," the bank said. "The service account was reduced due to patent payments overseas."


The income account balance, which tracks wages for foreign workers and dividends, marked a deficit of $1.9 billion last month, compared with a $1.5 billion shortfall a month earlier. South Korean companies paid a total of $2.1 billion in dividends to foreign investors, up from $1.9 billion a month earlier.

"The current account balance is likely to swing to a surplus of $1 billion from May as such dividend payments do not occur," a central bank official said.

The current account balance is likely to be in the black until the end of this year, except for August when many people head overseas for summer vacations.

The service account deficit shrank to $1.3 billion from $1.5

billion due to a fall in patent payments overseas and fees spent to expand overseas businesses.

The trade surplus, meanwhile, dropped to $1.9 billion in April from $2.9 billion in March. Customs-cleared exports grew 12 percent to $25.6 billion, while imports rose 13.7 percent to $24.2

billion, the central bank said.

Imports of crude oil rose 38 percent to $4.2 billion in April from last year, it added.

Seoul, May 26 (Yonhap News)



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