Korea reports trade deficit for 14th month in April due to weak chip exports

[Photo by Yonhap]

South Korea reported a deficit in its trade balance for the 14th consecutive month in April as exports of mainstay chips plunged 41 percent from a year ago and demand from China, its largest trade partner, remained weak.

According to the Korea Customs Service on Monday, the country’s exports reached $49.6 billion in April, down 14.2 percent from the same period a year ago. Outbound shipments of automobiles, vessels, and general machinery rose 40.3 percent, 59.2 percent, and 8.1 percent, respectively, during the period, but those of mainstay chips fell 41 percent, display 29.3 percent, petroleum goods 27.3 percent, petrochemicals 23.8 percent, and steel 10.7 percent.

Chip exports were down $4.4 billion in April from a year ago as the price of memory chips continued to go down.

Expectations, however, are growing that the country’s trade balance may improve in the second half of this year given the recovery trend.

Data from the Ministry of Trade, Industry and Energy showed that Korea’s trade balance logged a deficit of $2.62 billion in April. The volume, however, has shrunk over the past months since January with $12.52 billion.

“Outbound shipments of chips are expected to recover in the second half,” said Kim Wan-ki, an official from the ministry. “We expect the trade balance to bounce back before export recovery.”

Industry insiders noted that market conditions in the chip industry are less likely to improve in a short period of time but a recovery cycle will begin in the third quarter with potential effects of the production cuts by major memory chip makers such as Samsung Electronics Co.