A South Korean think tank has projected population decline will factor into a reduction in the country's current account, turning the current surplus into a deficit a decade from now.

In a report on Monday, the Korea Institute for International Economic Policy(KIEP) pointed out that most of the country's account surplus, continued since 1998, is derived from the difference between savings and investments.

The size of the economically active population would then largely affect the country's savings power, and also the account balance.

But the chronic low birth rate and rapidly aging population are expected to drastically reduce the surplus and even push the account into negative territory.

Forecasting that the account could turn negative between 2030 and 2045, the report advised the nation to establish a virtuous cycle of account surplus and net foreign assets.