'Trade Deficit for 5 Consecutive Months... First Time in 14 Years'

$9.47 Billion Deficit in August Hits Record High
Semiconductor Exports Decline for First Time in 26 Months
Global Economic Slowdown in US, Europe, and China

Warning lights have turned on for the growth engine of the Korean economy. Amid a solidifying trend of trade deficits due to a sharp increase in energy import costs, even semiconductor exports, which have been the backbone of Korea's exports, declined for the first time in 26 months. The trade deficit with China is also deepening, resulting in a nearly $10 billion deficit in the trade balance for August, the largest ever recorded. The trade deficit has continued for five consecutive months since April, marking the first time in over 14 years since 2007. Although the government has issued emergency measures to prevent the worst trade deficit, the economic downturn in major export markets such as the United States, Europe, and China is severe, making a dramatic turnaround to a trade surplus this year unlikely.

According to the export-import statistics released by the Ministry of Trade, Industry and Energy on the 1st, the trade balance for last month recorded a deficit of $9.47 billion. This is the largest deficit in 66 years since trade statistics began in 1956. ▷Related article on page 3

Exports reached a record high for August at $56.67 billion, driven by major export items such as petroleum products, automobiles, steel, and secondary batteries, marking the highest monthly figure ever. This marks the 22nd consecutive month of export growth. However, imports surged 28.2% year-on-year to $66.15 billion in August. Energy imports, including crude oil and gas, amounted to $18.52 billion, an increase of $8.86 billion (91.8%) compared to the previous year. The sharp rise in energy import costs, along with global interest rate hikes led by the U.S., prolonged supply shortages of global raw materials due to the Russia-Ukraine war, and weakening global demand are cited as the main factors worsening the trade balance.

The problem is that the global economic downturn is worsening the trade environment, making a rebound difficult to expect. Even semiconductor exports, a representative export item, recorded $10.78 billion last month, down 7.8% year-on-year, marking the first negative growth in 26 months since June 2020 (-0.03%). The Ministry of Trade, Industry and Energy analyzed that the decline in semiconductor exports was due to reduced demand and price drops in major markets such as the U.S., Europe, and China. The situation in China, Korea's largest trading partner, is also deteriorating. The trade balance with China recorded a deficit of $380 million last month, marking four consecutive months of deficits for the first time in 30 years since diplomatic relations were established in 1992. The cumulative trade deficit with China has reached $3.268 billion as of this month.

Meanwhile, the cumulative trade deficit for this year reached $24.7 billion as of last month, surpassing the previous annual record deficit of $20.6 billion set in 1996 in just eight months.

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