Korea's current account deficit with Japan soars in last decade

SEOUL, Aug. 14 (Yonhap) -- South Korea's current account deficit with Japan has
been snowballing in the last decade due to its heavy dependence on Japanese goods
to power its export-driven economy, central bank data showed Friday.

Seoul's cumulative current account shortfall with Tokyo stood at $174.9 billion
in the 1999-2008 period, with the deficit widening sharply almost every year
during the decade, according to the data by the Bank of Korea (BOK).
The hefty current account deficit came as South Korea imported large amounts of
Japanese components and materials to make end-use products mostly for outbound
shipments, analysts said.
"The ballooning deficit with Japan is a structural problem," said Kwon Sun-woo,
an economist at the Samsung Economic Research Institute. "South Korea needs to
nurture its parts industry as well as core technologies."
Bucking the long-term trend, however, South Korea's current account deficit with
Japan narrowed this year as a weaker South Korean won against major currencies
helped boost its exports to Japan.
The shortfall stood at $14.8 billion in the January-July period this year, down
26.6 percent from the same period last year, according to the BOK.
The nation's current account, the broadest measure of cross-border trade, has
been in the black since February with imports falling sharper than exports. In
June, South Korea posted a current account surplus of $5.43 billion, the
second-largest monthly amount ever.
pbr@yna.co.kr
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