S. Korean Trade Barometer Falls

South Korea’s current account in 1990 slid into deficit for the first time in five years and is expected to record another shortfall this year, the Bank of Korea says.

The current account deficit was $2.1 billion last year, versus a surplus of $5.1 billion in 1989. The key reason was rising oil prices prompted by the Gulf crisis. Korea imports all its oil.

The current account embraces trade and such non-trade transactions as financial services and tourism. Trade, however, accounts for 90% of the current account.

Unless there is a dramatic increase in exports and in corporate investment in technology, South Korea is expected to post a current account deficit of $2.5 billion to $3 billion in 1991, according to a central bank official who requested anonymity.

“The Gulf War has been a heavy blow to our economy, with oil import expenditures soaring,” he said.

The central bank said imports last year rose about 15% to $65.1 billion. Exports were up 3% to $63.24 billion.

Imports of crude oil and other petroleum products hit $8.8 billion, up from $5.7 billion in 1989.

“Overall rises in imports of passenger cars and other expensive consumer goods like large television sets also fueled the trade deficit,” the bank official said.

Passenger car imports soared 81% to $68.5 million from $37.9 million in 1989.