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The Effects of Demographic Change on Current Account and Foreign Asset Accumulation

Author

Listed:
  • Kim, Hyo Sang

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

  • Yang, Da Young

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

  • Kang, Eunjung

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

Abstract

The current account surplus of Korea mainly comes from its export-driven trade surplus. The current account surplus can be interpreted as foreign savings for future consumption, which is ultimately accumulated in a net foreign asset position. Net foreign assets can contribute to the current account surplus with income balances such as profits, dividends and interest. Korea has maintained its current account surplus since 1998 due to the demographic structure, but only entered into a net foreign assets surplus country in 2014. Under Korea’s rapid demographic change, it is necessary to construct a positive feedback-loop structure between the current account surplus and net foreign assets.

Suggested Citation

  • Kim, Hyo Sang & Yang, Da Young & Kang, Eunjung, 2020. "The Effects of Demographic Change on Current Account and Foreign Asset Accumulation," World Economy Brief 20-36, Korea Institute for International Economic Policy.
    • Handle: RePEc:ris:kiepwe:2020_036
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    Keywords

    demographic; current account; foreign asset; surplus;
    All these keywords.

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