South Korea's Knowledge Services Trade Deficit Narrows to $7.26 Billion in 2024

In a groundbreaking revelation, the Bank of Korea announced on March 19 that South Korea's trade balance in knowledge services recorded a deficit of approximately $7.3 billion last year. This marks a significant reduction of about 43% from the $12.77 billion deficit in 2010, showcasing a positive shift in the nation's knowledge services trade dynamics.

The central bank has taken a pioneering step by developing the knowledge services trade statistics as part of the international balance of payments supplementary statistics, making South Korea the fourth country to do so after the United States, the United Kingdom, and the European Union (EU). This comprehensive data compilation from 2010 to 2024 offers an in-depth understanding of South Korea's knowledge services trade structure.

Breaking Down the Numbers

An official from the Bank of Korea highlighted, "Since 2010, the proportion of knowledge services in service trade has been increasing, with exports showing faster growth than imports, leading to a reduction in the deficit." By type, information and communications (+$2.76 billion) and culture and leisure (+$870 million) sectors recorded surpluses. Notably, revenues from Korean production companies supplying dramas to overseas OTT platforms like Netflix and Korean idol groups holding concerts abroad are captured in the export statistics for culture and leisure.

Conversely, the royalties for intellectual property (-$3.34 billion) and professional and business services (-$7.55 billion) sectors showed deficits. The information and communications industry (+$2.25 billion) posted a surplus, while manufacturing (-$4.4 billion) and personal and other industries (-$2.84 billion) showed deficits. By region, Asia (+$5.11 billion) recorded a surplus, contrasting with deficits in North America (-$5.73 billion) and Europe (-$2.85 billion).

Looking Ahead

The Bank of Korea plans to release quarterly data for the previous half-year every March and September, starting with this initial publication of statistics. This move is expected to provide ongoing insights into the evolving landscape of South Korea's knowledge services trade, highlighting the rapid growth in exports within the information and communications industry and the manufacturing sector's shift towards reducing its trade deficit.