[Photo by Yonhap]
South Korea has incurred another $5 billion trade deficit in the first 10 days of March as it continues to see a decline in the exports of mainstay products like semiconductors.
According to data from the Korea Customs Service on Monday, the country’s trade balance logged a deficit of $5 billion between March 1 and 10, leading to a cumulative deficit of more than $23 billion in the year, which is nearly half of last year’s total.
Exports totaled $15.8 billion in the first 10 days of March, down 16.2 percent from a year ago. Chip exports fell by 41.2 percent due to weak demand and inventory rise. Exports of wireless communication devices, precision instruments, and petroleum products also declined significantly over the year.
In contrast, exports of passenger vehicles jumped by 133.7 percent.
Outbound shipments to China, Korea’s largest trading partner, dropped by 35.3 percent compared to the same period last year. Exports to Vietnam and Japan fell by 16.4 percent and 7.3 percent, respectively. However, exports to the U.S. and India rose 5.6 percent and 5.5 percent, respectively.
As the trade deficit continues to widen, the Korean government is coming up with various measures to boost exports.
The government has decided to expand the refund guarantee (RG) support to help local shipbuilders gain more orders. With the recent rise in ship prices, the shipbuilding industry is facing difficulties due to the imminent depletion of RG limits.
RG is a system in which a financial institution promises to pay the customer’s advance payment to the ordering party in case the shipbuilder fails to deliver the ordered ship. The government plans to raise the guarantee ratio, currently at 70~85 percent, to support the shipbuilding industry.
In addition, the government will provide special guarantees of up to 93.6 billion won ($71.7 million) through export credit insurance to cover the risks of shipbuilders who receive RG issuance from financial institutions.
The government also plans to increase tax deductions for future car-related technologies, such as hydrogen and autonomous vehicles, as part of its support for new growth and fundamental technologies.
Furthermore, the government plans to expand trade finance support for small and medium-sized exporters by 2 trillion, bringing the total to 364.5 trillion won for this year.
By Song Gwang-sup and Minu Kim
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]