Korea's trade deficit balloons to $34 bn on deepening fall in chip exports and Chinese demand

[Photo by Yonhap]

South Korean exports fell on double-digit losses in major revenue sources of chips and Chinese demand during 20 days this month, setting the trade balance on path for a deficit streak into the seventh month and stretching annual red to fresh record of $33.8 billion.

According to data released by Korea Customs Service on Friday, the country’s exports fell 5.5 percent on year to $32.4 billion in the first 20 days of October. Average daily export was down 9.0 percent on year based on 13.5 working days, 0.5 days longer than a year earlier.

At current rate, exports would contract for the first time in two years after growth eased to a single digit from June.

Exports of mainstay chips fell 12.8 percent on year in the first 20 days of October to extend losses for the third month in another testimony of an industrial down cycle.

In further proof of sagging global demand, outbound shipments of steel products fell 17.6 percent, wireless communications devices 15.6 percent, and vessels 22.9 percent.

Exports of petrochemical products gained 16.4 percent, automobiles 32.1 percent, and auto components 9.8 percent.

Exports to China, Korea’s largest market, fell 16.3 percent. It would be the first time for shipments to China to decline for a fifth straight month since Jan.-May of 2020 if exports decline for the full month in October.

Exports to Japan also fell 16.1 percent and Taiwan 26.7 percent. Exports to the United States gained 6.3 percent, European Union 3.4 percent, and Vietnam 1.7 percent.

Imports added 1.9 percent on year to $37.36 billion in the first 20 days of October in sharp slowing in growth amid reduced industrial activity and easing in fuel cost.

Average daily import declined 1.9 percent.

Inbound shipments of chips rose 13.9 percent, gas 24.6 percent, chip manufacturing equipment 13.2 percent, and coal 14.8 percent. Imports of crude oil fell 0.3 percent, petrochemical products 18.5 percent, and precise machinery 2.7 percent. Imports of three primary energy sources reached $8.6 billion -- $4.77 billion in crude oil, $2.8 billion in gas, and $1.03 billion in coal – which is up 8.5 percent from the same period a year ago.

The growth in energy source imports fell to a single digit for the first time since March last year.

Imports from China jumped 10.9 percent, U.S. 6.6 percent, and Taiwan 5.0 percent, while those from EU fell 1.5 percent, Japan 6.0 percent, and Saudi Arabia 1.4 percent.

Korea’s trade balance logged a deficit of $4.95 billion in the first 20 days of October, widening from $2.4 billion in the same period a year ago and $4.1 billion a month ago.

Korea incurred a deficit of $2.48 billion in April, $1.6 billion in May, $2.5 billion in June, $5.09 billion in July, $9.39 billion in August, and $3.78 billion in September. The streak could continue for a seventh month in October.

Korea incurred a deficit of $1.16 billion with China in the first 20 days of October, turning back to negative territory after managing a surplus in September. Korea’s deficit with China had continued for four straight months from May to August.

Korea’s cumulative deficit in its trade balance as of Oct. 20 reached $33.8 billion, already exceeding previous annual record high of $20.6 billion in 1996.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]