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S. Korea to offer record trade financing to exporters to prop up exports

Economy 13:33 August 31, 2022

SEOUL, Aug. 31 (Yonhap) -- South Korea said Wednesday it plans to provide up to a record 351 trillion won (US$260 billion) in trade financing to local exporters in an effort to bolster exports amid a widening trade deficit.

The government also picked a decline in exports to China, falling chip prices and high energy costs as three major risks to the country's trade and plans to strengthen the management of such risks, according to the industry ministry.

The measure was announced as the country's trade balance deteriorated mainly because imports grew at a faster pace than exports due to high energy costs.

This file photo taken Aug. 22, 2022, shows stacks of containers at a port in South Korea's southeastern city of Busan. (Yonhap)

South Korea's exports, the main driver for economic growth, rose 9.4 percent on-year in July, marking the 21st consecutive month of growth.

But the nation suffered a trade deficit for the fourth straight month as high oil and commodity prices pushed up the country's import bills.

The ministry said exports will likely hit a record high this year to exceed the $644.4 billion tallied for last year, but export growth is expected to slow down in the second half due to the global economic slowdown.

Against this backdrop, the government has decided to expand trade financing to exporters in a bid to prevent them from facing difficulty in raising funds.

It will also provide an additional 9 billion won in supporting logistics costs for 750 small exporters and offer low-rate special loans worth 60 billion won to small firms troubled by rising costs.

Meanwhile, the government plans to step up cooperation with China in sectors that both nations are striving to foster, such as ICT and high-tech parts and materials.

The move is aimed at revitalizing South Korea's exports to China, the country's largest trading partner, as its shipments faltered in recent months amid China's economic slowdown.

The country's shipments to China fell 11.2 percent on-year during the first 20 days of August. The nation logged a trade deficit of $667 million with China in the cited period and is poised to post a trade shortfall with Beijing for the fourth straight month in August.

When it comes to the semiconductor sector, the government will support corporate investment to help chipmakers expand investment by more than 340 trillion won over the next five years.

It also plans to nurture some 150,000 personnel in the chipmaking industry and support the development of logic chip technology. Semiconductors accounted for about 20 percent of South Korea's exports.

This computerized image depicts South Korea's trade with China. (Yonhap)


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