This year’s current account surplus is expected to stand at US$110 billion (123.97 trillion won), the highest of all time. The figure is about 7.6 percent of the gross domestic product (GDP).
As there are no factors for the rise in the interest rates of the U.S. within this year, which weakens the keynote of the strong dollar, the pressure on the appreciation of the Korean won will increase for a while, with the expectation that the current account surplus will grow.
In the announcement of the revised economic outlook on Oct. 15, the Bank of Korea (BOK) cut the GDP growth forecast for this year to 2.7 percent, down 0.1 percentage points from a forecast of 2.8 percent in July. The figure is as much as 0.4 percentage points lower than the government’s forecast of 3.1 percent. The central bank expected that the consumer price increase for this year will decrease from 0.9 percent to 0.7 percent.
The BOK projected next year’s economic growth to be 3.2 percent, also down 0.1 percentage points from the previous 3.3 percent in July. The figure is the same as the next year’s economic growth forecast recently announced by the International Monetary Fund. The government expected the figure at 3.3 percent, up 0.1 percentage points higher.
The central bank forecasted that the current account surplus for this year will reach US$110 billion (123.97 trillion won), up US$12 billion (13.52 trillion won) from a forecast of US$98 billion (110.45 trillion won) made in July. This is largely due to the fact that both exports and imports dropped 6.4 percent and 15.3 percent, respectively, from a year ago, and the recession-type surplus trend strengthened due to the decrease in international oil prices and in raw materials imports. Next year’s current account surplus forecast was also revised to US$93 billion (104.81 trillion won) from the previous US$88 billion (99.18 trillion won).
Since there are no factors for the rise in the interest rates of the U.S. within this year and there is a growing influx of dollars into Korea from a huge current account surplus, the weak won will be limited. Regarding the forecast when the U.S. Federal Reserve will begin raising interest rates, BOK Governor Lee Ju-yeol revised the previous forecast of within the year, saying, “It is hard to predict when exactly.”