Trade Deficit of $8.1 Billion from July 1-20... Risk of Three Consecutive Months of Deficit in Trade with China

Public Trade Deficit of $1.539 Billion... Imports Up 25.4% Due to Increased Energy Import Costs

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kwon Haeyoung] The trade balance, which posted a record deficit of $10.3 billion in the first half of this year, continues its deficit trend in July, the first month of the second half. Exports to China, Korea's largest market, have declined, raising the possibility of a trade deficit with China for three consecutive months. The surge in raw material prices due to the Russia-Ukraine war has also increased energy import costs, worsening the trade balance.

According to the Korea Customs Service on the 21st, the trade deficit from July 1 to 20 reached $8.12 billion. During this period, imports rose 25.4% year-on-year to $45.348 billion. The sharp increase in global energy prices combined with supply chain instability caused a significant rise in import value. Exports amounted to $37.245 billion, up 14.5% compared to the same period last year.

As a result, the trade balance, which has been in deficit since April, is likely to record a deficit for four consecutive months. The cumulative trade deficit for this year totaled $18.458 billion as of the previous day.

The trade balance with China has been in deficit since May and is expected to remain so this month. From July 1 to 20, exports to China decreased by 2.5% year-on-year to $8.076 billion. Korea's exports have been hit due to China's economic slowdown caused by COVID-19 lockdown measures. This contrasts with export increases to the United States (19.7%), the European Union (18.1%), Vietnam (15.2%), and Singapore (27.9%). Meanwhile, imports from China rose 23.5% year-on-year to $9.615 billion, resulting in a trade deficit with China of $1.539 billion.

Global supply chain instability and the war-driven surge in energy imports have also worsened the trade balance. Crude oil imports increased by 107.5% year-on-year, and gas imports rose by 43.1%. Semiconductor imports grew by 35.7%, while imports of semiconductor manufacturing equipment (-10.3%) and passenger cars (-17.6%) declined.

Among major export items, exports of semiconductors (13.2%), petroleum products (109.7%), and passenger cars (15.0%) increased, while wireless communication devices (-12.2%) and precision instruments (-2.4%) decreased.

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