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The increasing service deficit and countermeasures

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Frame of Image nt in Korea, which has been aggravated since 2005, finally turned into a deficit in 2008. The unfavorable current account is mainly due to its service trade deficit and the increases in the prices of raw materials. The service account has been aggravated and the increasing service deficit is one of the main reasons for the change in the balance of current accounts. The service account has been a concern since the late 1990s, however, this
Figure 1.
Trend of Trade Balance
Source : Bank of Korea.
28
KIET Industrial Economic Review
concern has been amplified in the current decade. Recently, the service deficit is taken more seriously because of the turn in the current balance. The service deficit increased from 2.8 billion dollars in 2000 to 20.6 billion dollars in 2007, which is an average annual growth rate of 32.6%. Further, the amount of the service trade deficit is the third largest in the world, following Germany and Japan, whose deficits are $US45 billion and $US21.5 billion, respectively.1) The service trade surplus recorded its highest level in 1998, a year after the financial crisis. However, the balance of service trade turned into a deficit in 2000 and has been continuously growing. As you can see in Figure 1 , the aggravation of the service deficit has become even more severe since 2004. The service deficit increased with an average annual growth rate of 29.6% from 2000 to 2004, but the average annual growth rate of service deficit rose to 36.7% from 2004 to 2007.
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Title The increasing service deficit and countermeasures
Similar Titles
Material Type Reports
Author(English)

Cho, Hyunseung

Publisher

[Seoul]:Korea Institute for Industrial Economics & Trade

Date 2008
Journal Title; Vol./Issue KIET Industrial Economic Review:vol. 13(no. 4)
Pages 8
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Trade
Industry and Technology < General
Holding KIET; KDI School

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