Korea`s current account surplus outstrips Japan`s but raises concerns

Korea`s current account surplus amounted to 42.22 U.S. billion dollars in the first eight months of this year, bigger than Japan`s 41.53 billion dollars posted in the same period by 690 million dollars. For the whole year, Korea is forecast to post 63 billion dollars in current account surplus, larger than Japan`s 60.1 billion dollars by 2.9 billion dollars. If the current trend of surplus continues, Korea is likely to surpass Japan in this year`s current account surplus. In the past, Japan`s current account surplus had been around 10 times larger than Korea`s.

Robust exports are the biggest contributor. Korea`s exports in October reached a record 50.51 billion dollars, topping 50 billion dollars for the first time. For the entire year, exports are projected to post 550 billion dollars. Korea`s exports stood at the 100 million dollar range in 1964, which exceeded 10 billion dollars in 1997. In just 50 years since the nation embarked on economic development, exports have surged 5,500 times.

The latest performance deserves credit given adverse business conditions. Stronger Korean won and weaker Japanese yen weighed down on Korea`s export competitiveness. Amid a simultaneous investigation, Korean entrepreneurship has weakened due to winds of economic democratization. Misconduct should be judged by law but companies` efforts to strive in overseas markets should be encouraged further.

An increase in current account surplus, exports and foreign exchange reserves serve as a prop-up for the Korean economy against external shocks like the 2008 global financial crisis. Trade figures stay favorable and economic growth is recovering, but such warm breeze is not efficiently felt by the public. In reality, exports and economic growth are led by a small number of large companies that are internationally competitive including Samsung Electronics and Hyundai Motor. A huge current account surplus can lead to further appreciation of the won, which can hamper growth of exports.

Exports have been a driving force that made today`s Korea with small land area and insufficient natural resources. The government should continue to drive the exports engine while boost domestic demand at the same time. Not only the government and companies, but also the political sector that has legislative power has huge responsibility to take. More than 100 economic invigoration bills are now waiting to pass the National Assembly. Both the leading and opposition parties should deal with these bills promptly to reduce economic uncertainty.