The deficit was attributed to a sizable fall in exports of key items such as semiconductors and petrochemical products. At the same time, imports rose considerably as the country brought in a greater amount of oil and gas from overseas.
The KCS said South Korea’s exports fell 2.7 percent year-on-year to $33.62 billion for the first 20 days of January, while its imports jumped 9.3 percent to $43.88 billion.
The country is expected to suffer a trade imbalance for the 10th consecutive month if the trend continues. It will mark the first time in 26 years that Korea has recorded such a long period of monthly trade deficit.
Deteriorating terms of trade were also cited as the reason for the imbalance. The Korean currency, which plunged to as low as 1,450 won against the U.S. dollar in the second half of last year, rebounded to the 1,200-won level against the greenback this month. The appreciation of the won made Korean products lose their price competitiveness on the global market.
The won’s strength also contributed to increasing Korea’s imports. The country saw its imports of wireless communication equipment soar by 87.9 percent. Imports of cars surged 62.3 percent.
Jung In-gyo, a professor at the international trade department of Inha University, said that it is highly likely that this year’s trade deficit will be bigger than last year’s. He warned that the trade situation will get worse in the first half of the year than the latter half.
He suggested that the country needs to work out measure to encourage investment and help improve companies’ international competitiveness on a long-term basis to address the trade imbalance issue.
The slumping semiconductor industry is likely to worsen the country’s trade imbalance. The Korea Institute for Industrial Economics and Trade (KIET) forecast that semiconductor exports will plunge 9.9 percent in 2023 from a year before. Falling exports to China, South Korea’s largest trading partner, are also cited as one of downside risks.
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