S.Korea's trade deficit hits 15th straight month

But the Ministry of Trade, Industry and Energy says a return to surplus could happen from the year's second half

Port of Busan (Courtesy of Yonhap)
Port of Busan (Courtesy of Yonhap)
Sul-Gi Lee 1
2023-06-02 10:57:09 surugi@hankyung.com
Economy

South Korea last month suffered its 15th straight month of trade deficit, its longest streak since the 1997-98 Asian financial crisis, due to the delay in global economic recovery causing a decline in exports to the nation's six major markets.

The Ministry of Trade, Industry and Energy on Thursday said exports in May fell 15.2% from the same month last year to $52.2 billion while imports declined 14% to $54.3 billion for a trade deficit of $2.1 billion. Starting in March last year, this streak is the longest in 26 years since the 29 straight months of deficit from January 1995 to May 1997.

The cumulative deficit this year also rose to $27.3 billion.

Exports to all six of the country's major markets declined year on year. Those to China fell 20.8% to $10.6 billion, the US 1.5% to $9.4 billion, Association of Southeast Asian Nations 21.2% to $8.4 billion, Central and South America 26.3% to $1.9 billion, and the Middle East 2.6% to $1.5 billion.

China accounted for 20.3% of South Korean exports and the US 18.1%, narrowing the former's lead from 18.8 percentage points in January 2010 to 2.2 last month.

Exports of semiconductors, the country's single largest export item, fell 36.2% to $7.3 billion for the sector's 10th straight month of decline. Those of petroleum products dropped 33.2% to $4.3 billion, petrochemicals 26.3% to $3.8 billion and steel 8.8% to $3.3 billion.

Car exports, however, remained brisk by surging 49.4% to $6.2 billion.

The daily export average in May recovered to the $2.4 billion level for the first time this year at $2.43 billion. The trade deficit has steadily shrunk every month since hitting a record high in January.

"Looking at the export growth of petroleum products and general machinery to China in May, I think that reflection of the effect of China's reopening (resumption of economic activity) has started," said Kim Wan-ki, the ministry's director general for international trade affairs.

"Considering the recent expansion of operations, the trade balance is expected to improve by a considerable width in June and a return to surplus in the second half is possible," he added.

Write to Sul-Gi Lee at surugi@hankyung.com
#korea trade deficit #south korea trade deficit #korea export #korea deficit #korea china trade

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