S. Korea reports record-high trade deficit in January due to sluggish demand for semiconductors

새해 첫달부터 수출 감소 무역적자 역대 최대

Good evening. It's 9PM here in South Korea and thank you for joining us on Arirang News.
We begin with growing export concerns in the country.
Falling exports took a big bite out of the country's trade balance in January.
In fact, the nation recorded a worst-ever trade deficit last month.
Our economics correspondent Shin Ha-young starts us off.

South Korea’s trade balance continued to plunge in the new year due to sluggish demand for semiconductors.
According to data released by the Ministry of Trade, Industry and Energy on Wednesday, the country logged a record-high trade deficit of 12-point-7 billion U.S. dollars in January.
This marks the eleventh month in a row of deficit, which is the longest consecutive run of deficits since the global financial crisis in 2008.

And in fact, the deficit in January was more than a quarter the size of the shortfall for all of last year.
In 2022, the annual trade deficit came to about 47-and-a-half billion dollars, which is the biggest in the country's history, and more than twice as big as the previous record set in 1996.
The deficit for January came as exports for the month dropped by 16-point-6 percent from a year earlier to a little over 46 billion dollars.
It was the fourth straight month of decline amid the ongoing global economic slowdown and downturn in the semiconductor industry.
By item, outbound shipments of semiconductors plunged by almost 45 percent on-year as their prices tumbled.
On the other hand, overseas sales of cars rose by nearly 22 percent on-year, while sales of petroleum products rose by about 12 percent.
The report also cited the base effect as a factor behind the fall in overall exports, which came as exports in January last year had the strongest performance for any month of January.
By nation, slowing economic growth due to global inflation and monetary tightening pulled down the exports to China by over 31 percent, and exports to the United States to about 6 percent from the previous year.
Meanwhile, South Korea’s imports were down for the second straight month with an on-year decrease of 2-point-6 percent to almost 59 billion dollars.
Due to the high demand over winter, the three major energy imports, which are crude oil, gas, and coal amounted to over 15 billion dollars again last month.

Regarding the trade balance, the ministry pledged to put in more efforts to support exports.

"There is an on-going economic slowdown due to major countries’ monetary tightening and the prolonged war in Ukraine. The government is well aware of the recent trade deficit and falling exports, and we will do everything we can to improve the sluggish exports."

The official added that the minister will make on-site visits to address any export bottlenecks.
Meanwhile, South Korea’s Finance Minister Choo Kyung-ho blamed a fall in chip prices and the high energy demand.
However, he forecasts that the trade balance will improve after January citing lower demand for energy as the weather improves, as well as a boost in exports from China’s reopening.
Shin Ha-young, Arirang News.

#Semiconductor #Trade #Arirang_News

2023-02-01, 21:00 (KST)