Trade Deficit of $5.2 Billion from April 1-20... Energy Imports Surge Due to High Oil Prices (Update)

Exports at $36.3 Billion... Up 16.9% YoY
Imports at $41.5 Billion... Trade Deficit as Imports Surpass Exports
Energy Prices Soar... Terms of Trade Deteriorate

March Exports Reach $63.48 Billion, Up 18.2%... Trade Balance Turns to Deficit After One Month
(Busan=Yonhap News) Kang Deok-cheol reporter = On the 1st, container unloading operations are underway at Busan Port's Sinsundae Pier. In March, South Korea's exports reached a record high for the month, driven by strong exports of semiconductors and petrochemicals. However, imports also increased to an all-time high, causing the trade balance to return to a deficit after one month. The Ministry of Trade, Industry and Energy announced on the 1st, through the 'March Export-Import Trends' report, that March exports recorded $63.48 billion, an 18.2% increase compared to the same month last year. 2022.4.1
kangdcc@yna.co.kr
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[Asia Economy Sejong=Reporter Lee Jun-hyung] The trade balance is likely to continue its deficit streak for the second consecutive month. This is due to a sharp increase in energy import costs caused by high oil prices, as well as no signs of abatement in rising raw material prices.

According to the Korea Customs Service on the 21st, the trade balance from the 1st to the 20th of this month was preliminarily recorded as a deficit of 5.199 billion dollars. Imports rose 25.5% year-on-year to 41.5 billion dollars, while exports increased by only 16.9% to 36.3 billion dollars. Considering that the trade balance recorded a deficit of 2 billion dollars during the same period last year, the deficit has more than doubled in the past year.

Looking at exports alone, the performance was not bad. Key export items such as semiconductors (22.9%), petroleum products (82%), and automobile parts (3.9%) showed strong growth. Exports to major countries including the United States (29.1%), the European Union (12.3%), and Vietnam (37.2%) also increased compared to last year.

The problem lies in the soaring energy import costs. Among major import items, the import growth rates for the three main energy sources?crude oil (82.6%), gas (88.7%), and coal (150.1%)?stood out. This is due to the sharp rise in international energy prices caused by geopolitical conflicts such as the Ukraine crisis. In fact, as of last month, prices for major imported energy sources such as crude oil (72%), gas (200%), and coal (441%) surged significantly compared to a year ago.

The surge in energy prices has also worsened trade terms. According to the Bank of Korea, the net barter terms of trade index, which shows South Korea’s trade terms, fell to 87.69 last month, marking 11 consecutive months of decline. A net barter terms of trade index below 100 means that export goods are not receiving fair prices compared to import goods.

Not only the Ukraine crisis but also China’s lockdown policies are acting as negative factors for the trade balance. Recently, China has locked down 45 major cities, including Shanghai, the ‘economic capital,’ to curb the spread of COVID-19. China’s large-scale lockdown policies, as South Korea’s largest trading partner, inevitably lead to export shocks and a surge in raw material prices due to supply chain instability.

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