"End Not in Sight"... Will Trade Deficit Prolong for 13 Months?

Due to sluggish exports, the current account deficit in January this year exceeded a record high of $4.5 billion, raising concerns that the trade balance may also continue to show a deficit for the 13th consecutive month.

According to related government agencies on the 12th, the Korea Customs Service will announce the preliminary export-import performance figures for the period from the 1st to the 10th of this month on the 13th. The trade balance recorded a deficit of $5.3 billion (7.0225 trillion KRW) last month, marking the 12th consecutive month of deficits since March last year. This is the first time in over 25 years since the continuous deficits from January 1995 to May 1997 that the trade deficit has persisted for more than 12 months.

Although the deficit last month was reduced by more than half compared to the record high of $12.7 billion in January this year, the cumulative trade deficit of $18 billion over two months this year amounts to 38% compared to last year, intensifying concerns.

The key issue is the timing of the semiconductor export recovery. Since semiconductor exports, the main export item, sharply declined, the goods balance recorded the largest deficit ever in January, continuing on a worsening path.

There are also forecasts that if China, the largest export market for Korean semiconductors, fully reopens, the trade balance improvement will accelerate.

The fortunate point is that imports of the three major energy sources?crude oil, gas, and coal?which have significantly impacted the trade deficit, have been decreasing this year. As the weather warms from this month, energy imports are expected to decline, which could further reduce the trade deficit.

Lee Chang-yang, Minister of Trade, Industry and Energy, emphasized, "In February, energy imports remained large due to winter demand, resulting in a trade deficit. Although the deficit has narrowed compared to January, since a large trade deficit continues, we will make every effort to improve the trade balance."

[Image source=Yonhap News]

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