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(LEAD) S. Korea's exports log double-digit decline in January; trade deficit hits record high

All News 10:30 February 01, 2023

(ATTN: RECASTS headline to highlight steeper decline in exports; ADDS more details throughout)
By Oh Seok-min

SEOUL, Feb. 1 (Yonhap) -- South Korea's exports logged a steeper on-year decline in January on weak demand for semiconductors and other items amid an economic slowdown, the industry ministry said Wednesday.

The country also suffered the largest ever monthly trade deficit on high energy prices last month, deepening concerns over the country's economic growth momentum.

Outbound shipments fell 16.6 percent on-year to come to US$46.27 billion in January, following a 9.5 percent on-year fall the previous month, according to the data compiled by the Ministry of Trade, Industry and Energy.

Exports, the country's key growth engine, fell in October last year for the first time since 2020 when the country was hit by COVID-19, and have reported on-year falls in each of the following months. It is also the first time since 2020 that exports fell for four consecutive months.

Imports fell 2.6 percent on-year to $58.96 billion in January, resulting in a trade deficit of an all-time monthly high of $12.69 billion, far higher than the previous record of $9.44 billion set in August last year.

Imports have exceeded exports in South Korea since April last year, and it is the first time since 1997 that the country has suffered a trade deficit for 11 straight months.

South Korea depends on imports for most of its energy needs, and the country's energy imports came to $15.8 billion in January, accounting for 26.8 percent of its total imports, the ministry said.

This photo taken Jan. 10, 2023, shows stacks of containers at a port in South Korea's southeastern city of Busan. (Yonhap)

This photo taken Jan. 10, 2023, shows stacks of containers at a port in South Korea's southeastern city of Busan. (Yonhap)

The fall in exports was blamed on a global economic slowdown amid high inflation and aggressive monetary tightening by major economies, as well as the downturn of the world's chip market.

A high base effect was also behind the fall last month, as exports advanced 15.5 percent to $55.46 billion in January 2022, the highest figure for any January, according to the ministry.

Overseas sales of semiconductors, a key export item, dropped 44.5 percent on-year to $6 billion last month on falling demand and the drop in chip prices.

Sales of petrochemicals also sank 25 percent to $3.79 billion, and exports of machinery fell 15.8 percent to $3.86 billion last month. Exports of steel products declined 25.9 percent to $2.71 billion.

Shipments of auto parts fell 16.2 percent to $1.73 billion, and those of bio and health items tumbled 33.5 percent to $1.11 billion.

But car exports jumped 21.9 percent to $4.98 billion, and sales of petroleum products advanced 12.2 percent to $4.13 billion. Those of ships spiked 86.3 percent to $1.44 billion and sales of secondary batteries climbed 9.9 percent to $800 million last month, the data showed.

By nation, exports to China, South Korea's No. 1 trading partner, sank 31.4 percent to $9.17 billion last month, with shipments of chips to the neighboring country falling more than 45 percent.

Exports to China have been on the decline for eight months in a row.

South Korea's exports to the United States fell 6.1 percent to $8.05 billion, and shipments to the Association of Southeast Asian Nations (ASEAN) also slid 19.8 percent to $8.26 billion. ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam.

Exports bound for the Commonwealth of Independent States fell 17.6 percent to $920 million amid the prolonged Russia-Ukraine war.

Exports to the European Union, however, inched up 0.2 percent to $5.43 billion, and those to the Middle Eastern nations added 4.0 percent to $1.46 billion, the data showed.

"We take the current situation seriously and make all-out efforts to revive export momentum despite continued downside risks," Industry Minister Lee Chang-yang said.

Trade Minister Ahn Duk-geun will hold an emergency meeting later in the day to check the exports situation and seek supportive measures, according to the ministry.


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