Korea’s current account balance is feared to swing into the red in January due to a large deficit in trade and service accounts stemming from high oil prices and a strong local currency, data showed Thursday.

The country’s imports jumped 19.8 percent on-year to $32.03 billion in the first 20 days of January, while exports rose 5.9 percent to $29.1 billion, bringing its trade deficit to $2.93 billion, according to the data by the Korea Customs Service.

If exports fail to outweigh imports by around $3 billion during the remainder of the month, the country’s trace balance is expected to shift into the red for the first time since January 2010.

The trade account makes up a big portion of the current account.

A spike in the number of overseas travelers during the Lunar New Year’s holiday also raised concerns the service account may record a deficit after reaching a $357 million surplus in November.

The shorter number of working days in January and a rising global oil price are also factors that could lead to a current account deficit, watchers said.

A strengthening Korean won was also cited as a negative factor as it tends to erode the competitiveness of local exporters and spur overseas trips.

The Korean won, which traded at the 1,160 won-level against the U.S. dollar earlier this month, settled at a two-month high of 1,125.9 won against the greenback on Wednesday.

However, some experts said even if Korea posts a current account deficit in January due to seasonal factors, the balance is unlikely to remain in the red for some time.

“In months that the Lunar New Year’s holiday falls in exports tend to shrink more sharply than imports,” said an official at the Bank of Korea. “Although the number of overseas travelers jumped, there was also a large inflow of Chinese tourists during the Lunar New Year’s holiday.” 

(Yonhap News)