Trade Deficit for Two Consecutive Months... Oil Price Shock and Food Protectionism 'Negative Factors' (Comprehensive)

Exports last month reached $61.52 billion, up 21.3% YoY
Imports were $63.22 billion, resulting in a $1.71 billion trade deficit
Prices of 3 major energy sources soar... Spread of food protectionism also a negative factor
Industry Minister: "Concerns over prolonged trade deficit... Economy in a serious situation"

Production, Consumption, and Investment Shaken by China's Lockdown
(Busan=Yonhap News) Reporter Son Hyung-joo = A view of Busan Port Sinsundae Pier on the afternoon of the 31st of last month. In April, production, consumption, and investment all recorded a 'triple decline' for the first time in 2 years and 2 months since the outbreak of COVID-19. Amid growing concerns over global inflation, rising raw material prices and ongoing supply chain disruptions are intensifying worries about economic slowdown. 2022.5.31
handbrother@yna.co.kr
(End)


＜Copyright(c) Yonhap News Agency, Unauthorized reproduction and redistribution prohibited＞

[Asia Economy Sejong=Reporter Lee Jun-hyung] Last month, exports reached $61.52 billion, setting a new record for the highest export value in May. However, the rapid increase in energy imports led to a trade deficit for the second consecutive month. It is also analyzed that the food protectionism policies of major countries are acting as a negative factor for the trade balance.

According to the "May Export-Import Trends" announced by the Ministry of Trade, Industry and Energy on the 1st, last month's exports amounted to $61.52 billion, a 21.3% increase compared to the same period last year ($50.7 billion). This figure exceeds the previous highest May export ($50.7 billion) by more than $10 billion. Also, exports surpassed $60 billion again after two months, following March ($63.8 billion). The average daily export was $2.67 billion, up 10.7% from the same period last year ($2.42 billion).

Export and import growth rates and trade balance trends. [Photo by Ministry of Trade, Industry and Energy]

Major export items also showed favorable trends. Exports of 15 major items increased simultaneously for the first time in nine months since last August. Specifically, nine items including semiconductors (15%), petrochemicals (14%), steel (26.9%), and petroleum products (107.2%) showed double-digit growth rates. In particular, exports of petroleum products reached $6.41 billion, surpassing $6 billion for the first time ever. Exports to major countries such as the United States (29.2%), China (1.2%), and the European Union (23.5%) also increased compared to last year.

However, imports recorded $63.22 billion, resulting in a trade deficit of $1.71 billion. Since surpassing $60 billion in December last year ($61.16 billion), imports have consistently remained in the $60 billion range except for February this year. The trade balance has been in deficit for two consecutive months since April.

The continued trade deficit is attributed to energy import costs. Since geopolitical conflicts such as the Ukraine crisis, international energy prices including crude oil have soared. In fact, prices of the three major energy sources?crude oil (63%), gas (369.2%), and coal (281.8%)?have significantly increased over the past year. Last month, coal imports reached a record high of $2.78 billion. Consequently, energy imports last month amounted to $14.75 billion, an 84.4% increase compared to the same period last year.

Price trends of the three major energy sources: crude oil, gas, and coal.
[Photo by Ministry of Trade, Industry and Energy]

It is also analyzed that the rising prices of agricultural products are not unrelated to the trade deficit. Due to adverse conditions in grain-producing regions such as the Ukraine crisis and the food protectionism policies of major countries, imports of agricultural products like wheat and corn have increased. Last month, agricultural imports amounted to $2.42 billion, marking three consecutive months above $2 billion since March this year.

The government is also concerned about the impact on exports, the "growth engine" of the Korean economy. Minister of Trade, Industry and Energy Lee Chang-yang stated, "Concerns about the prolonged trade deficit are growing due to high energy and raw material prices, including crude oil prices above $100 per barrel. The domestic and international economic conditions such as global low growth, inflation, and supply chain instability present a serious situation for our economy, which has achieved growth centered on exports."

Minister Lee expressed his intention to improve the trade balance by supporting export companies. He said, "We will closely analyze the financial and logistics situations faced by domestic companies to ensure that trade, the main growth engine of our economy, can continue its growth trend. We will make every effort to support exports, including specialized support by industry."

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