Korea Suffers Biggest Trade Deficit in 66 Years

  • By Choi Hyung-seok

    July 04, 2022 12:33

    Korea suffered its biggest trade deficit ever in the first six months of this year due to surging raw material and oil prices.
    According to the Korea Customs Service last Friday, exports increased 15.6 percent on-year in the January-June period to US$350.30 billion, but imports surged 26.2 percent to a record $360.60 billion. This resulted in a deficit of $10.30 billion, the highest for the first half in 66 years.
    It exceeded even the $9.16 billion deficit in the first half of 1997 before the Asian financial crisis. In the first half of 2008, Korea suffered a $6.4 billion deficit. At this rate, Korea is expected to post the biggest annual trade deficit since the global financial crisis in 2008.
    The Korea International Trade Association forecast that exports will grow 9.2 percent this year to $703.9 billion, but imports will soar 16.8 percent to $718.5 billion. That would translate into a deficit of $14.7 billion for the whole year.
    This year was also the first time in 14 years that the country posted three straight months of trade deficits since April.
    The biggest culprit is a surge in energy prices. Korea's energy import costs increased more than $40 billion to $87.9 billion or 24 percent of total imports in money terms. Korea also suffered two months of deficits in trade with China for the first time in 28 years.
    Joo Won at Hyundai Research Institute said, "If a trade deficit compounds a fiscal deficit, export-dependent Korea’s credit rating could decline."
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