Korea may see biggest trade deficit of 26 years at $15.8 bn in 2022: KIET

South Korea could incur the largest red - $15.8 billion – in 26 years in its trade account this year even as exports hit fresh record high on bigger rise in import from a spike in commodity and grain cost, according to state-invested think tank.

According to a report released by the Korea Institute for Industrial Economics and Trade (KIET) on Monday, the country’s exports are expected to reach $703.8 billion this year to break the $700 billion milestone for the first time in history.

But the on-year gain of 9.2 percent would be overwhelmed by 17 percent surge in imports to $719.6 billion to deliver a trade deficit of $15.8 billion, what would be the largest since the country recorded a deficit of $20.6 billion in 1996.

Exports of 13 mainstay items including semiconductors and automobiles will likely expand thanks to rising export prices in the second half, but the growth will stop at 6.3 percent due to growing uncertainties from outside, the report said.

By industry, refineries and petrochemical firms are expected to see an export rise, but shipbuilder and bio health companies won’t, according to the report.

KIET also projected that the country’s GDP growth would stop at 2.6 percent in 2022 – 2.8 percent in the first half and 2.5 percent in the second half.

“The domestic economy is enjoying consumption-led growth amid recovery from the virus situation, but there still exist uncertainty factors such as faster monetary tightening from growing geopolitical risk and inflationary pressure and disrupted supply networks,” said an official from KIET.

Domestic consumption growth this year is estimated at 3.3 percent, lower than 3.6 percent of last year, due to restraint from rise in debt financing cost and inflation.

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