South Korea reports worst-ever trade deficit in Jan. due to weak chip exports

South Korea reports worst-ever trade deficit in Jan. due to weak chip exports [Photo by Yonhap]

South Korea suffered the worst monthly trade deficit of $12.7 billion in January on weak demand for semiconductors, the country’s key export item, and high energy prices, data showed Wednesday.

Outbound shipments from Korea dropped 16.6 percent to $46.3 billion last month from $55.5 billion in the same period a year ago, according to the data compiled by the Ministry of Trade, Industry and Energy. Imports fell 2.6 percent on year to $59 billion in January, leading to the worst monthly trade deficit of $12.7 billion.

It marks the country’s 11th consecutive month in the red. It is also the first time that the trade balance recorded a three-digit deficit in dollar terms.

Sluggish semiconductor exports are blamed for the deficit.

Among the country’s 15 major export items, automobiles and ships performed well but outbound shipments of semiconductors, the largest export item, plunged 44.5 percent on year due to a sharp drop in the prices of DRAM and NAND flash memory chips.

Last year, semiconductor exports were $129.2 billion, more than twice as much as that of petroleum products ($63 billion), the second largest export item.

The semiconductor industry expects global chip demand to recover from the second half of this year, driven by data centers that need equipment upgrades and China’s reopening.

The country’s trade performance will gradually improve as the seasonal factors fade out and the impact of China’s reopening brings positive impact, Finance Minister Choo Kyung-ho said Wednesday.