Trade Deficit for 7 Consecutive Months... No End in Sight (Comprehensive)

October Exports $52.48 Billion... 5.7% Decrease YoY
Imports $59.18 Billion... Trade Deficit $6.7 Billion
Cumulative Deficit $35.6 Billion... Largest Since Trade Statistics Began

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Lee Junhyung] The trade balance has recorded a deficit for seven consecutive months for the first time in 25 years since 1997. The cumulative trade deficit this year has exceeded $30 billion for the first time in history. The export sector, a pillar of the Korean economy, has turned on its warning lights.

According to the 'October Export-Import Trends' announced by the Ministry of Trade, Industry and Energy on the 1st, last month's trade balance recorded a deficit of $6.7 billion. Exports amounted to $52.48 billion, down 5.7% from the same period last year, while imports increased by 9.9% to $59.18 billion. As a result, the trade balance has continued to run a deficit for seven consecutive months since April. It is the first time in about 25 years since May 1997 that the trade deficit has persisted for seven months.

The accumulated trade deficit from the beginning of this year to last month is about $35.6 billion. It is the first time since trade statistics were compiled in 1956 that the cumulative trade deficit has surpassed $30 billion. At this rate, the trade deficit could exceed $40 billion within this month. The previous record for the largest annual trade deficit was $20.62 billion, recorded in 1996 just before the foreign exchange crisis.

The main culprit of the trade deficit is energy prices. Last month, imports of the three major energy sources?crude oil, gas, and coal?amounted to $15.53 billion, a 42.1% increase compared to the same period last year ($10.93 billion). This accounts for about 26.2% of total imports. From January to October this year, imports of the three major energy sources totaled $158.7 billion, an increase of $71.6 billion over the past year.

Adding to the woes, exports were also hit by the global economic slowdown. Exports of key items such as semiconductors (-17.4%) and petrochemicals (-25.5%) sharply declined compared to the same period last year. In particular, semiconductor exports have been shrinking for three consecutive months since turning negative in August for the first time in 26 months. Exports also decreased in major regions such as China (-15.7%), the Association of Southeast Asian Nations (ASEAN, -5.8%), and Japan (-13.1%). A Ministry of Trade, Industry and Energy official explained, "Exports of semiconductors and petrochemicals declined due to weak demand caused by the global economic slowdown," adding, "The import market in China, the largest export country, has also contracted."

There are expectations that the annual trade deficit will approach $50 billion. The Korea Economic Research Institute forecasted that this year's trade deficit could reach $48 billion. Additionally, the institute predicted that the trade deficit ratio relative to the total trade volume (sum of exports and imports) this year will reach 3.3%, the highest since 1996 (7.4%).

The government plans to establish a dedicated export support system by department to formulate export strategies and support plans. Cooperation with export support organizations such as KOTRA will also be strengthened.

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