South Korea's $116.63 Billion Current Account Surplus Tops Germany and Japan Combined

Chip boom pushes South Korea behind only China

South Korea recorded a current account surplus of $116.63 billion in April to June 2026, exceeding the combined surpluses of Germany and Japan for the first time in comparable records stretching back to 1996. Rising semiconductor prices and demand for chips used in artificial intelligence helped lift the country to second place among 36 major economies with figures available for the quarter.

International Monetary Fund data available through the Bank of Korea's Economic Statistics System put China first at $193.72 billion. Germany followed South Korea with $52.28 billion, while Japan recorded $50.62 billion. Adding the displayed German and Japanese figures gives $102.90 billion, leaving South Korea ahead by $13.73 billion.

The figures, released on October 25, show how quickly South Korea's external earnings have expanded. Its surplus was $28.39 billion in the same quarter a year earlier. The latest total was about 4.1 times that amount, an increase of $88.24 billion. Germany's surplus rose 11.9% over the same period, while Japan's increased 5%.

A current account measures a country's transactions with the rest of the world in goods, services, investment income and transfers. A surplus means the money received through those transactions exceeds the money paid abroad. Semiconductor exports are a major part of South Korea's earnings, although the account also includes payments such as income from overseas investments.

South Korea's semiconductor exports reached $113.89 billion in the second quarter, up 181.6% from a year earlier, according to the Ministry of Data and Statistics. The surge accelerated in the third quarter, making the durability of the chip boom central to the country's economic outlook.

A historic comparison with Germany and Japan

South Korea's lead over Germany alone reached $64.35 billion, the widest gap since comparable records began in 1976. Its $66.01 billion lead over Japan was the largest since 1996, when figures became available for all three countries.

The comparison changed sharply during the year. Across January to June, South Korea accumulated a surplus of $191.01 billion. Germany recorded $126.39 billion and Japan $112.12 billion, so their combined total still exceeded South Korea's over the full first half. South Korea moved ahead of their combined figure specifically in the second quarter.

China remained ahead over both periods, recording a first half surplus of $378.03 billion. South Korea's second quarter surplus was equivalent to 60.2% of China's, up from 22.7% a year earlier. Among quarters when both countries posted surpluses, that was the highest ratio since the final quarter of 2019.

July and August extend the lead

South Korea continued to earn a larger surplus than Germany and Japan combined in July and August. Its total for those two months reached $88.19 billion, against $36.85 billion for Germany and $43.97 billion for Japan. Their combined $80.82 billion left South Korea ahead by $7.37 billion.

The sequence shows the expansion spreading beyond a single quarter, although the international comparison for the third quarter covers only July and August. The semiconductor export figures extend through September, so the two sets of numbers cover different periods.

• April to June 2026: South Korea's current account surplus reached $116.63 billion, ahead of Germany and Japan combined.
• July and August: South Korea recorded another $88.19 billion surplus, again exceeding the two countries' combined total.
• July to September: Semiconductor exports reached $148.02 billion, up 218.7% from a year earlier.
• October 2026: The IMF projected a full year current account surplus of $421.946 billion.

The July and August result also brought South Korea's accumulated surplus for the first eight months to $279.20 billion, calculated from the $191.01 billion first half total and the subsequent $88.19 billion.

Memory chips account for most of the export surge

Semiconductor exports rose from $113.89 billion in the second quarter to $148.02 billion in the third, an increase of $34.13 billion, or about 30%. Compared with the same periods a year earlier, growth accelerated from 181.6% to 218.7%.

Memory chips supplied an especially large share of the earnings. Third quarter memory exports rose 311.6% to $130.7 billion. That represented about 88.3% of the quarter's semiconductor exports, calculated from the two totals. Memory chips store the information that computers need to process tasks, including the demanding calculations used by AI systems.

September alone brought semiconductor exports of $60.33 billion, up 262.8% from a year earlier. That month accounted for about 40.8% of the third quarter's semiconductor export value.

Higher prices are a crucial part of the story. A company can receive more money for the same number of chips when the price of each chip rises. South Korea's export earnings therefore depend on both the quantity sold and the prices buyers are willing to pay.

The IMF forecasts a record share of national output

The IMF's October World Economic Outlook projected South Korea's current account surplus at $421.946 billion for 2026, second among 190 countries and territories with figures available. China was projected to remain first at $863.205 billion. South Korea ranked fifth in the previous year.

The IMF expected South Korea's surplus to increase by $298.892 billion, the largest increase among those economies. China's projected increase was $138.803 billion, making South Korea's rise about 2.15 times as large.

Measured against gross domestic product, the value of goods and services produced in the economy, South Korea's projected surplus was 18.8%. That would be its highest ratio in IMF data beginning in 1980 and nearly twice the 10.1% recorded in 1998, after the Asian financial crisis.

The corresponding forecasts were 4.0% for China, 4.5% for Germany and 4.6% for Japan. Among 22 economies with GDP exceeding $1 trillion, South Korea's projected ratio ranked second after Taiwan. Expressing the surplus as a share of GDP helps show its scale relative to the size of each economy.

The central bank sees room for an even larger surplus

The Bank of Korea's assessment was more optimistic than the IMF's annual projection. In its Economic Conditions Assessment issued on October 22, the central bank said:

The current account surplus will remain at a high level exceeding the initial forecast ($450 billion for the year) on the back of strong semiconductor exports.

The central bank's outlook suggested the annual total could approach $500 billion. That would be about four times the previous year's record of roughly $123.1 billion. The IMF's $421.946 billion projection, the central bank's initial $450 billion forecast and the possibility of a result near $500 billion are forecasts rather than completed annual results.

Private financial institutions also raised their expectations. At the end of September, the average forecast from eight major investment banks put South Korea's surplus at 17.5% of GDP for 2026 and 17.4% for 2027, according to figures compiled by the Korea Center for International Finance. Those estimates had risen by 1.5 and 2.4 percentage points, respectively, from a month earlier.

Prices and AI spending create concentrated risks

Yang Jun-seok, an economics professor at the Catholic University of Korea, identified prices as the key force behind the expansion:

The surplus is fundamentally thanks to semiconductors — and to prices rather than volumes.

Yang warned that weaker AI investment or greater competition among memory suppliers could quickly reduce those earnings:

If the AI boom fades or more companies make AI memory and price competition intensifies, the current account surplus will fall sharply.

Kim Kwang-seok, head of the economic research office at the Korea Institute of Economic and Industry Research, pointed to competing suppliers in the United States and China. His concerns centred on Micron and China's ChangXin Memory Technologies, known as CXMT, and the risk that South Korean producers could lose market share as those companies develop their capabilities.

For South Korea, demand and competition affect the same revenue stream from different directions. Slower investment in AI infrastructure would reduce demand for chips. Expanding supply from rival producers could put pressure on prices. With memory accounting for nearly nine tenths of third quarter semiconductor export value, changes in that market would carry substantial weight.

The IMF expects the surplus to shrink later

The IMF projected that South Korea's current account surplus would remain above $400 billion in 2027 and 2028 before falling to $295.656 billion in 2029 and $177.491 billion in 2031. Its projected international ranking would fall to third in 2029 and fifth in 2031.

The 2031 figure is about 58% below the IMF's 2026 projection of $421.946 billion. Those forecasts describe a substantial retreat from the current peak while still leaving South Korea with a large surplus.

Yang argued that the period of strong earnings provides an opportunity to restructure struggling businesses before conditions weaken. Kim called for stronger management of financial risks, pointing to persistent high interest rates and the possibility of a sharp reversal in the exchange rate.

Export strength lifts growth as domestic demand matters

The semiconductor boom has already helped improve the broader economic forecast. The IMF's October assessment raised South Korea's expected growth in 2026 to 3.3%, from 2.6% in July, and lifted its 2027 forecast to 2.8%, from 2.5%.

The upgrade followed September's record exports of $120.9 billion, including semiconductor shipments above $60 billion. The same concentration that is lifting trade earnings is therefore helping drive expectations for faster economic growth.

The government has identified stronger domestic demand as a source of support if exports slow, with investment in new industries and greater competitiveness in services among its priorities. For businesses and workers outside the chip industry, the practical issue is how far export earnings translate into investment, jobs and spending across the economy.

South Korea now has an unusually large flow of income from overseas transactions. Keeping that strength durable will depend on semiconductor demand, the prices exporters receive and the ability of other industries and domestic spending to support growth when the chip cycle cools.

Key Points

• South Korea's second quarter current account surplus reached $116.63 billion, second among 36 major economies with figures available.
• The surplus exceeded Germany and Japan's combined total for the first time in comparable data beginning in 1996.
• Third quarter semiconductor exports rose 218.7% to $148.02 billion, with memory accounting for about 88.3%.
• The IMF projected a 2026 surplus of $421.946 billion, equivalent to 18.8% of GDP.
• The Bank of Korea expected the annual surplus to exceed its initial $450 billion forecast.
• The IMF projected smaller surpluses later, while named economists warned about weaker AI spending and stronger chip competition.