Trade Deficit of $2.1 Billion from 1st to 20th This Month... Crude Oil Imports Increase by 57.8%

Exports up 10.1% YoY to $37.3 billion... Imports rise 18.9% to $39.3 billion
Crude oil and gas imports increase 57.8% and 114.3% respectively... Trade balance may turn to deficit after two months

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kwon Haeyoung] Due to the sharp rise in international oil prices, the trade balance recorded a deficit of 2.1 billion dollars from the 1st to the 20th of this month. Although export value increased compared to a year ago, energy prices such as crude oil and gas surged due to Russia's invasion of Ukraine, causing imports to increase more, raising the likelihood that the trade balance will return to a deficit after two months.

According to the Korea Customs Service on the 21st, the trade deficit from the 1st to the 20th was recorded at 2.078 billion dollars. During the same period a year ago, there was a surplus of 754 million dollars. Accordingly, the cumulative trade balance from January this year to the 20th of this month showed a deficit of 5.977 billion dollars.

Imports from the 1st to the 20th of this month amounted to 39.334 billion dollars, an 18.9% increase compared to the same period last year. This was due to a significant increase in energy import value caused by the global surge in energy prices and supply chain instability resulting from the Ukraine crisis.

Exports reached 37.3 billion dollars, a 10.1% increase compared to the same period last year. Considering the number of working days, the average daily export value increased by 26.4%. During this period, the number of working days was 13.5, two days fewer than last year.

As a result, the trade balance, which briefly turned to a surplus last month, is increasingly likely to return to a deficit after two months. The trade balance recorded a deficit of 430 million dollars in December last year, a deficit of 4.89 billion dollars in January this year, and then turned to a surplus of 840 million dollars in February.

This trade deficit is due to the sharp rise in raw material prices centered on energy sources dependent on imports such as crude oil, liquefied natural gas (LNG), and coal. Although exports performed well, the increase in energy import value continues in line with rising oil prices. From the 1st to the 20th of this month, crude oil imports amounted to 5.313 billion dollars, a 57.8% increase compared to the same period last year. Gas imports were 3.563 billion dollars, petroleum 1.744 billion dollars, and coal 1.165 billion dollars, with import values surging by 114.3%, 52.5%, and 68.7% respectively compared to a year ago.

There is growing concern that if the trade deficit trend, which is the growth engine of our economy, continues, the so-called "twin deficits"?a simultaneous deficit in both the fiscal balance and the current account?could become a reality this year. According to the preliminary statistics on the international balance of payments for 2022 released by the Bank of Korea earlier this month, South Korea's current account surplus in January this year was 1.81 billion dollars, nearly 5 billion dollars less than a year ago. Although the surplus continued for 21 consecutive months, it significantly decreased compared to January last year (6.78 billion dollars) and also declined compared to December last year (6.06 billion dollars).

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