By Park Hyong-ki
The country's services account posted a record deficit of nearly $16 billion in the first half of the year, according to the Bank of Korea (BOK), Friday.
This comes as the country saw a sharp decrease in the number of inbound tourists especially from China amid diplomatic tension over the United States' deployment of an antimissile system here.
The poor performance in the services account, along with earnings shocks, has rattled shares related to tourism, including Hana Tour and Mode Tour.
The travel account saw a deficit of $8.5 billion.
And the widening services deficit has lowered the current account surplus to less than $30 billion over the same period, despite robust exports backed by semiconductors.
The current account, the broadest measure of trade, reached a surplus of $29.6 billion in the first six months of the year, down 17 percent from a year earlier. This marks the second lowest growth, even though exports reached $309.5 billion.
Analysts forecast the economy will be sustainable through the end of the year backed by global demand for chips, which has so far helped Korean growth stay afloat. Semiconductors accounted for 20 percent of total overseas shipments.
The services account is expected to stay in negative territory in the second half as data shows more people are traveling abroad to get away from the summer heat wave than visitors to the country.
The number of outbound travelers increased more than 13 percent to 14.3 million in the first half, while those who entered the country stood at 7.2 million.
"The travel sector will face a slowdown amid low sentiment," said Lee Dong-ryun, an analyst at KB Securities.
The gap between the number of inbound and outbound travelers may narrow slightly as the rate for ticket purchases and reservations to travel abroad decreased 10 percent in July year-on-year, according to Lee.
Analysts say uncertainty stemming from a weak economic outlook due to growing tension between the United States and China over trade will make it harder for consumers to spend on leisure and travel.
The country's economy grew 0.7 percent in the second quarter from the January to March period, according to the Bank of Korea (BOK), Thursday. It grew 2.9 percent from the same period a year ago. The BOK has revised down its estimate for annual growth from 3 percent to 2.9 percent.
This is likely to further add downward pressure on the balance of payments and tourism.
"Consumers are tightening their purse strings on forecasts that the economy will slow down later this year," said Sung June-won, an analyst at Shinhan Investment.
The country's services account posted a record deficit of nearly $16 billion in the first half of the year, according to the Bank of Korea (BOK), Friday.
This comes as the country saw a sharp decrease in the number of inbound tourists especially from China amid diplomatic tension over the United States' deployment of an antimissile system here.
The poor performance in the services account, along with earnings shocks, has rattled shares related to tourism, including Hana Tour and Mode Tour.
The travel account saw a deficit of $8.5 billion.
And the widening services deficit has lowered the current account surplus to less than $30 billion over the same period, despite robust exports backed by semiconductors.
The current account, the broadest measure of trade, reached a surplus of $29.6 billion in the first six months of the year, down 17 percent from a year earlier. This marks the second lowest growth, even though exports reached $309.5 billion.
Analysts forecast the economy will be sustainable through the end of the year backed by global demand for chips, which has so far helped Korean growth stay afloat. Semiconductors accounted for 20 percent of total overseas shipments.
The services account is expected to stay in negative territory in the second half as data shows more people are traveling abroad to get away from the summer heat wave than visitors to the country.
The number of outbound travelers increased more than 13 percent to 14.3 million in the first half, while those who entered the country stood at 7.2 million.
"The travel sector will face a slowdown amid low sentiment," said Lee Dong-ryun, an analyst at KB Securities.
The gap between the number of inbound and outbound travelers may narrow slightly as the rate for ticket purchases and reservations to travel abroad decreased 10 percent in July year-on-year, according to Lee.
Analysts say uncertainty stemming from a weak economic outlook due to growing tension between the United States and China over trade will make it harder for consumers to spend on leisure and travel.
The country's economy grew 0.7 percent in the second quarter from the January to March period, according to the Bank of Korea (BOK), Thursday. It grew 2.9 percent from the same period a year ago. The BOK has revised down its estimate for annual growth from 3 percent to 2.9 percent.
This is likely to further add downward pressure on the balance of payments and tourism.
"Consumers are tightening their purse strings on forecasts that the economy will slow down later this year," said Sung June-won, an analyst at Shinhan Investment.
