Macroeconomic Forecast South Korea

BMI View: South Korea's current account dipped into deficit in January for the first time since January 2009. The shift from a US$1.5bn surplus in December to a US$0.4bn deficit was due to exceptionally cold weather driving up energy consumption and a fall in the exports of ships. We believe that South Korea's current account position will return to surplus in the months ahead, although we do not expect a repeat of 2009's US$42.7bn (4.6% of GDP) showing. We believe that exports will remain above 2009 levels, but faster import growth due to higher commodity prices and a more confident Korean consumer will push up imports thereby bringing the current account surplus down to US$33.4bn (3.1% of GDP) by end 2010.

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