Korea to End This Year in the Red as Exports Plunge

  • By Jo Jae-hee

    December 02, 2022 11:37

    Exports fell 14 percent on-year in November, declining for the second straight month, while Korea's trade balance was in the red for the eighth month running.
    The main culprits were the slowing global economy and rising import costs due to high energy prices.
    The Ministry of Trade, Industry and Energy on Thursday said exports last month fell to US$51.9 billion, while imports grew 2.7 percent to $58.9 billion, resulting in a trade deficit of $7 billion.
    Exports declined at a faster rate than in October, which also slowed import growth as demand for materials and components for goods destined for export weakened.
    Imports rose by $1.57 billion compared to a year ago, but considering that energy imports soared by $3.31 billion, other inbound shipments must have dropped significantly.
    Cho Kyung-yeop at the Korea Economic Research Institute said, "Given the structure of Korea's economy, which imports parts and materials to produce export products, a slowdown in both outbound and inbound shipments can be construed as a sign of an economic slump."
    Semiconductor exports fell the most among key exports at 29.8 percent, followed by petrochemical products (down 26.5 percent). The U.S. was the only market where Korea's exports grew, but shipments to China and ASEAN dropped for the second month, while shipments to Latin America, India and Japan also fell.
    Weak exports to China, the country's biggest trading partner, have increased the burden on Korea's economy.
    Next year's trade outlook remains bleak. The Korea International Trade Association expects exports to decline four percent next year to $662.4 billion, while imports will shrink eight percent to $676.2 billion, resulting in a $13.8 billion trade deficit.
    Although the trade deficit will narrow compared to this year's, Korea will suffer a deficit for a second year for the first time since the Asian financial crisis in 1997.
    Joo Won at Hyundai Research Institute said, "Once exports start declining it usually lasts anywhere from six months to more than a year. Exports are expected to fall until the second half of next year."
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