Korea’s trade deficit at $15 bn by July, first red streak in trade with China

2022.08.01 10:56:32 | 2022.08.01 14:37:42

[Photo by Yonhap]이미지 확대

[Photo by Yonhap]

(Updated with additional information and comments)

South Korea added $4.67 billion in deficit from trade activities last month to put the cumulative red in the trade balance at $15.03 billion in July as imports continued to outweigh exports from strong commodity prices and demand from its largest market of China waned.

According to data released by the Ministry of Trade, Industry and Energy on Monday, the trade account in July generated a deficit of $4.67 billion as imports grew 21.8 percent to $65.37 billion versus 9.4 percent gain in exports to $60.7 billion.

The deficit streak extended to the fourth month, the longest red since June-September in 2008.

Korea’s trade deficit hit $10.3 billion as of June, the largest red for a six-month period.

Worse, the country has logged a deficit in trade with China which had been responsible for the bulk of the country’s annual trade surplus for the third straight month to raise concerns for entrenched worsening in the Korean trade balance on increased China’s technology self-sufficiency.

Korea has been registering a deficit in trade with China from May this year for the first time bilateral data was kept since normalization of ties 30 years ago.

Exports stayed strong to deliver July monthly record led by global demand in refined fuel, automobiles, and components. Daily exports also increased 14.1 percent to an all-time high in July.

Outbound shipments of seven of 15 mainstay items increased.

Exports of petroleum products surged 86.5 percent, automobiles 25.3 percent, secondary batteries 11.8 percent, and chips 2.1 percent. Shipments of computers, meanwhile, fell 27.3 percent, petrochemicals 1.7 percent, display 2.7 percent, bio-health 12.1 percent, and home appliances 18.7 percent.

By region, exports to the United States gained 14.6 percent, ASEAN countries 20.9 percent, the European Union 14.6 percent, the Middle East 11.7 percent, and India 92.4 percent. Shipments to China fell 2.5 percent. Reduced shipments to China can cause trade deficit as Korea has owed the biggest share of surplus to trade with China.

이미지 확대
Korea incurred a trade deficit of $570 million with China for the third straight month. Chip shipments to China increased while steel and petrochemicals fell 8.3 percent and 14.1 percent, respectively.

“Exports in June gained by a single digit in July following June due to sluggish global economy,” said Trade, Industry and Energy Minister Lee Chang-yang. “There are concerns about a slowdown in export growth and widening trade deficit. The government is well aware of the situation and is doing its best to maintain industry and corporate competitiveness.”

Lee noted that the government will announce a comprehensive export measure that will include special support to major industries and regulatory easing that have restricted export activity this month.

Imports valued over $60 billion for the fifth straight month in July. Energy imports added $8.7 billion on year to $18.5 billion. Crude imports surged 99.3 percent on year to $11.52 billion in July and gas 58.7 percent to $3.98 billion.

Coal prices skyrocketed to $410.24 per ton in July, which resulted to record imports to Korea. Coal imports were up 110.9 percent to $2.99 billion.

Dubai crude was trading at $103.14 per barrel in July, up from $72.93 in the same month a year ago. The Japan-Korea-Marker (JKM) price for LNG also soared to $23.4 per million British thermal units (mmBtu), up from $10.94 a year ago.

Chip imports also increased 25 percent on year and wheat and corn 29.1 percent and 47.6 percent, respectively.

By Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]