Da-il Trade Deficit Surpasses $20 Billion... Impact of Export Slump and Weakening Boycott Movement

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] The trade deficit with Japan, which had sharply declined due to Japan's export restrictions, expanded again last year.

Although exports to Japan have been sluggish due to the impact of the novel coronavirus disease (COVID-19), imports from Japan increased again as the boycott movement against Japanese products eased.

According to the Ministry of Trade, Industry and Energy on the 2nd, South Korea recorded a trade deficit of 20.84 billion dollars with Japan last year. This amount increased by 1.68 billion dollars compared to 19.16 billion dollars the previous year.

Exports to Japan amounted to 25.08 billion dollars, down 11.8% from the previous year, while imports from Japan were recorded at 45.92 billion dollars, a slight decrease of 3.5%.

Japan is South Korea's largest trade deficit country. Since 2004, South Korea has recorded an annual trade deficit of 20 to 30 billion dollars in trade with Japan.

However, in July 2019, when Japan imposed export restrictions, a boycott movement against Japanese products broke out domestically, and the trade deficit that year hit the lowest point in 16 years since 2003, at 19.16 billion dollars.

The increase in the trade deficit with Japan last year is attributed to sluggish exports of South Korea's key products due to the impact of COVID-19.

Exports of petrochemical products to Japan decreased by 25.1% compared to the previous year. Steel (-23.3%), automotive parts (-34.9%), and petroleum products (-32.5%) also showed significant declines. Although demand in Japan for automobiles and construction has partially recovered, it remains lower than the previous year, affecting the figures.

On the other hand, imports from Japan increased as the year progressed. Looking at the monthly import growth rates, imports decreased from April to August last year but turned to a 0.6% increase in September, followed by 4.6% in October, 15.9% in November, and 18.7% in December.

This is due to the easing of the boycott movement against Japanese products and intensified promotional events for Japanese goods. In particular, demand for beer and automobiles, which were major targets of the boycott, appears to be gradually recovering.

Domestically, the perception that the boycott movement is still necessary remains high.

According to a recent survey by market research firm Embrain Trend Monitor of 1,000 adult men and women regarding the boycott of Japanese products, 71.8% responded that they have participated in the boycott, and 69.3% said that the boycott is (still) necessary.

This content was produced with the assistance of AI translation services.