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(2nd LD) S. Korea's exports down for 6th month in March on falling chip demand

Economy 11:24 April 01, 2023

(ATTN: RECASTS lead to highlight trade deficit; ADDS more details in last 18 paras)
By Oh Seok-min

SEOUL, April 1 (Yonhap) -- South Korea's exports fell for the sixth consecutive month in March due mainly to weak global demand for semiconductors amid an economic slowdown, the industry ministry said Saturday, adding the country has suffered a trade deficit for 13 months in a row.

Outbound shipments fell 13.6 percent on-year to US$55.12 billion last month, according to the data compiled by the Ministry of Trade, Industry and Energy.

Exports have logged an on-year fall since October last year amid aggressive monetary tightening by major economies to curb inflation. It is also the first time since 2020 that exports have declined for six months in a row.

The decline came as exports of semiconductors, the country's key export item, dived 34.5 percent in March on falling demand and a drop in chip prices.

A high base effect was also behind the fall last month, as exports hit an all-time high of $63.8 billion in March 2022, the ministry said.

The decline logged last month was steeper than a 7.5 percent fall the previous month, but the export value grew to over $55 billion for the first time in six months, it added.

Imports fell 6.4 percent on-year to $59.75 billion in March, as the country's energy imports went down 11.1 percent on-year, the ministry said. South Korea depends on imports for most of its energy needs.

Accordingly, the country suffered a trade deficit of $4.62 billion last month.

Imports have exceeded exports in South Korea since April last year on high energy prices, and it is the first time since 1997 that the country has logged a trade deficit for 13 months in a row.

The trade deficit for the first three months of this year surpassed more than half of the losses reported for all of 2022. Last year, the country logged its largest trade deficit of $47.8 billion ever.

But the monthly figure has shrunk this year from $12.65 billion in January to $5.27 billion in February and further to $4.62 billion in March, the ministry said.

This file photo taken March 21, 2023, shows a port in the southeastern city of Busan. (Yonhap)

This file photo taken March 21, 2023, shows a port in the southeastern city of Busan. (Yonhap)

In detail, overseas sales of semiconductors came to $8.6 billion last month, down by $4.5 billion from a year earlier, due to the downturn of the world's chip market over an economic slowdown.

The average contract price of DRAM fell to around $2.21 in December last year from about $3.4 in the first half of 2022, according to government data.

Sales of petro products fell 16.6 percent on-year to $4.6 billion, and those of petrochemicals slid 25.1 percent to $4.09 billion last month.

Exports of steel products also went down 10.7 percent to $3.14 billion.

Global sales of display items tumbled 41.6 percent to $1.22 billion, and shipments of bio and health items decreased 36.4 percent to $1.18 billion in March, according to the ministry.

But car exports spiked 64.2 percent to an all-time high of $6.52 billion, extending the winning streak to the ninth month in March.

It is the first time ever that the country's vehicle exports surpassed the $6 billion won level.

Exports of secondary batteries also rose 1 percent on-year to $870 million, the highest level for any March.

By nation, exports to China, South Korea's No. 1 trading partner, sank 33.4 percent to $10.42 billion last month, extending the losing streak to the sixth month. China's demand for chips and petrochemical products has weakened amid an economic slowdown, the ministry said.

Shipments to the Association of Southeast Asian Nations (ASEAN) also skidded 21 percent to $9.61 in March, as South Korea's exports with Vietnam, the top trading partner among ASEAN countries, reported a marked decline, it noted.

ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam.

Exports to the European Union inched down 1.2 percent to $6.14 billion, and those to Japan fell 12 percent to $2.44 billion last month. The figure for the Central and South American countries declined 5.6 percent to $2.38 billion.

But exports to the United States inched up 1.6 percent to $9.79 billion, and those to the Middle Eastern nations jumped 21.6 percent to $1.84 billion last month.

Shipments to India increased 4.5 percent to $1.58 billion and those to the Commonwealth of Independent States surged 86.9 percent to $1.26 billion due to a low base effect amid the Russia-Ukraine war, the data showed.

"South Korea has been facing difficulties in exports due to a global economic slowdown and growing uncertainties in the global financial sector," Industry Minister Lee Chang-yang said.

"The government will make a strong push to spur exports and reduce the trade deficit through policy financing, tailored support measures for each industry, and help for smaller firms making inroads into overseas markets," he added.

The government set this year's export target at $685 billion, up 0.2 percent from last year's total, though the finance ministry earlier forecast exports would mark a 4.5 percent on-year decline in 2023.


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