[Photo by MK DB]
South Korea’s trade data so far this month suggests a deficit streak for the sixth month for the first time in 25 years with exports turning negative for the first time in nearly two years on softer demand across the world to raise alarm for the trade-led economy.
According to data released by Korea Customs Service on Wednesday, the country’s exports fell 8.7 percent on year to $32.96 billion in the first 20 days of September. Average daily export increased 1.8 percent on year based on 13 working days, 1.5 days shorter than a year earlier due to Chuseok holiday.
Exports growth would be coming to a stop for the first time since October 2020..
Outbound shipments of mainstay chips increased 3.4 percent on year in the first 20 days of September after falling for the first time in 26 months in August. Exports of petrochemical products jumped 38.8 percent and vessels 33.4 percent. Exports of automobiles sank 7.5 percent, steel products 31.6 percent, wireless communications devices 25.9 percent, auto components 12.3 percent, and computer surrounding equipment 25.5 percent.
Exports to China, Korea’s largest trading partner, fell 14 percent. Korea’s shipments to China have been declining for three straight months until August. Exports to the United States declined 1.1 percent, European Union 15.3 percent, Vietnam 13 percent, and Japan 8.3 percent during the cited period.
Exports to Singapore, on the other hand, increased 44.3 percent and Malaysia 28.4 percent.
The country’s imports added 6.1 percent on year to $37.06 billion in the first 20 days of September. Average daily import rose 18.3 percent.
Imports have been exceeding exports in growth for 15 straight months since June last year.
Inbound shipments of crude oil jumped 16.1 percent on year between September 1 and 20, chips 11.1 percent, gas 106.9 percent, and coal 12.8 percent. Imports of machinery, on the other hand, fell 5.7 percent, petrochemical products 36.5 percent, and chip manufacturing equipment 11.3 percent as output becomes adjusted on inventory rise.
Imports of three energy sources reached $10.5 billion – $5.3 billion in crude oil, $3.9 billion in gas, and $1.3 billion in coal – which is up 38 percent from a year-ago period.
Imports from China jumped 3.1 percent,, the U.S. 8.3 percent, Saudi Arabia 32 percent, and Taiwan 16.9 percent while those from the EU fell 8.4 percent, Japan 7.6 percent, and Russia 56.1 percent.
Korea’s trade balance incurred a deficit of $4.1 billion in the first 20 days of September in sharp retreat from a surplus of $1.17 billion in the same period a year ago.
Korea logged a deficit of $2.48 billion in April, $1.6 billion in May, $2.5 billion in June, $5.08 billion in July, and $9.49 billion in August to register a deficit streak for five months in a row for the first time in 14 years. The streak could continue for a sixth month in September which would be the first time in 25 years.
Korea managed to report a trade surplus of $924 million with China in the first 20 days of September after four straight months of deficit until August for the first time since bilateral relations normalized in 1992.
Korea’s cumulative deficit in its trade balance this year as of Sept. 20 reached $29.2 billion, already exceeding annual record high of $20.6 billion in 1996.
“Export growth has slowed and deficit in trade balance continues due to a surge in energy imports,” said Economy and Finance Minister Choo Kyung-ho. “There needs to be close monitoring as there is big volatility in energy prices and export restriction risk surrounding chips and China.”
The Korean government plans to spend 12 billion won ($8.6 million) in reserves to support exports by easing distribution costs. It will also come up with measures to enhance competitiveness in shipbuilding, secondary battery, artificial intelligence and robot, and future mobility sectors to motorize exports of potential new industries and enhance competitiveness of core industry sectors, according to Choo.
A separate survey on economists by the Federation of Korean Industries showed Wednesday that Korea’s trade deficit could reach an all-time high of $28.17 billion this year. The survey, conducted Sept. 6-15 online, asked 15 research center heads of Korean brokerages. They predicted the U.S. dollar could go up to 1,422.7 won.
Four out of 10 in the survey expected deficit to reach above $30 billion.
Annual exports would reach $695 billion this year, outpacing previous record of $644.4 billion in 2021, the survey showed. The sluggish global economy poses greatest threat to Korea’s exports, followed by supply chain setback from U.S.-China rivalry, and rise in raw materials prices.
By Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]