Roundup: S. Korea's travel account posts largest deficit in 7 years on MERS aftermath

South Korea's travel account deficit posted the largest in about seven years due to the effect from the Middle East Respiratory Syndrome (MERS) outbreak, central bank data showed Wednesday.

The travel account balanced logged a deficit of 1.45 billion U. S. dollars in July, the largest since July 2008 when it registered a 1.65 billion-dollar deficit, according to the Bank of Korea (BOK) .

The travel account deficit continued to increase from 0.41 billion dollars in May to 1.04 billion dollars in June as the deadly viral disease discouraged foreign tourists from visiting the country.

The MERS infected 186 people, among whom 36 passed away. South Korea became the most MERS-contagious country in the world except for Saudi Arabia, where the disease first emerged in 2012 and more than 1,000 cases have since been reported.

According to the government data, more than 130,000 foreign tourists canceled their travel plan to Seoul in June alone when the viral disease peaked. The government declared the de-facto end of MERS spread in late July amid no report of new infection case for more than three weeks.

The number of foreign travelers visiting South Korea nearly halved in July compared with the same month of last year, contributing to the expansion in travel account deficit, the bank said.

Current account balance, the widest measure of cross-border capital flow, posted a surplus of 10.11 billion dollars in July, staying in the black for 41 straight months since March 2012.

It marked the longest surplus trend, topping the previous high of 38 months since June 1986. The July figure was down from the prior month, but was up 28.3 percent from a year earlier.

The longest monthly surplus, however, came from faster fall in imports than exports, indicating the country could have fallen into the so-called "recession-type" surplus.

Exports, which account for around half of the export-driven economy, declined 10.4 percent from a year earlier to 48.2 billion dollars in July. Imports tumbled 20.6 percent to 37.35 billion dollars.

Trade surplus for goods reached 10.86 billion dollars, staying above the 10 billion-dollar level.

Service account deficit, which measures the flow of travel, transport costs and royalties, fell from 2.5 billion dollars in June to 1.92 billion dollars in July.

Primary income account surplus, which includes monthly salaries and investment income, narrowed to 1.28 billion dollars in July from 1.68 billion dollars a month earlier due to a decrease in income on the equity account.

Financial account, which gauges cross-border capital flow without transactions in goods and services, recorded an outflow of 10.64 billion dollars in July, little changed from the previous month.

Net outflow in direct investment tumbled from 4.99 billion dollars in June to 0.12 billion dollars in July due to the shift to a net inflow of foreign direct investment into the country.

Portfolio investment, which includes stock and bond transactions, registered a net outflow of 7.15 billion dollars in July, larger than 6.5 billion dollars the previous month. It was attributed to local residents reducing the purchase of foreign stocks and bonds along with foreign investors selling domestic securities to repatriate money home.

Foreign funds began to flow out of the South Korean financial market on expectations for interest rate hike in the United States and the depreciation of the South Korean currency versus the greenback.

Other investment account, including trade credit and foreign debt, turned into a net outflow of 3.38 billion dollars in July from a net inflow of 2.24 billion dollars in June due to a growth in overseas deposits by domestic financial institutions and the repayment of their borrowings. Endi