EXCUSE FOR MEASURES TO NARROW KOREA’S TRADE SURPLUSAny adverse effects of Korea’s return to the FX monitoring watchlist are expected to be limited, but concerns are growing that President-elect Trump would use Korea’s bigger trade surplus with the US as an excuse to pressure Korea into narrowing it.“Considering that, against US concerns, Korea sold US dollars to prevent a fall in its currency value, it is unlikely the US would take any extra measures” that are discriminatory toward Korea, said Jeong Young-sik, executive director of the International Macroeconomics and Finance department at the Korea Institute for International Economic Policy (KIEP).“But the (new) US administration could use it as an excuse to narrow Korea’s trade surplus with the US," he added.
On Friday, Korea’s Ministry of Economy and Finance explained that Korea was returned to the list because its bilateral trade surplus with the US exceeded $15 billion, and the country’s current account surplus surpassed 3% of its gross domestic product (GDP).
As of end-June, Korea’s annualized current account surplus took up 3.7% of the country’s GDP due to a significant increase in the country’s current account surplus from July 2023 to June 2024, on the back of a higher goods surplus driven by strong global demand for Korean tech goods, according to the Treasury Department’s report.
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