February 22, 2022 12:25
Korea faces the first three months of trade deficit in 14 years. The prospect has sent alarm bells ringing in the export-dependent country since it is already suffering a fiscal deficit due to expanded welfare coverage.
According to the Korea Customs Service on Monday, the country suffered a US$1.68 billion trade deficit in the first 20 days of February due to rising prices of oil imports. Korea's trade balance shifted into the red for the first time in 20 months last December and has stayed there.
Normally Korea enjoys one of the world's healthiest annual trade surpluses. But imports in the first 20 days of this month increased 12.9 percent on-year to $36 billion.
Overall exports grew more at 13.1 percent, but that was not enough to balance the books as imports of crude oil, coal and other energy sources rose fast. Korea's crude oil imports surged 55 percent to $4.9 billion, while coal imports shot up 131 percent to $1.2 billion.
Korea imports about 900 million barrels of oil a year, both for consumption and lucrative processing, and every $10 increase in global crude prices results in a $9 billion increase in the country's trade deficit.
The trend is expected to continue for some time. Joo Won at the Hyundai Research Institute said, "Global oil prices surged due to supply chain problems even before the Ukraine crisis. The situation is expected to continue through the first half of this year."
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