August Trade Surplus of $870 Million... '3 Consecutive Months of Surplus' (Update)

Ministry of Industry, August 2023 Export-Import Trends
Exports Down 8.4% · Imports Down 22.8%
Semiconductor Exports Down 21%... "Lowest Decline Rate This Year"

Last month, the trade balance recorded a surplus close to $900 million, continuing a trade surplus for three consecutive months. The export decline rate slowed to single digits, marking the lowest level this year despite the decrease in semiconductor exports.

According to the Ministry of Trade, Industry and Energy on the 1st, the trade balance for August recorded a surplus of $870 million. This marks three consecutive months of surplus since June this year.

As the decline rate of semiconductor exports slowed, the overall export decrease rate also recorded single digits. August exports amounted to $51.87 billion, down 8.4% compared to the previous year. The export decline trend, which began in October last year, has continued for 11 months.

[Image source=Yonhap News]

An official from the Ministry of Trade, Industry and Energy explained, "Last month's exports decreased by 8.4% due to the decline in export unit prices of semiconductors, petroleum products, and petrochemicals, as well as the reverse base effect from last August's record high export performance ($56.6 billion) for August," adding, "The export decline rate slowed to single digits, showing significant improvement compared to the previous month (-16.4%)."

By item, exports increased in six categories: automobiles (29%), auto parts (6%), general machinery (8%), ships (35%), displays (4%), and home appliances (12%). Automobile exports achieved the highest August performance ever, marking 14 consecutive months of export growth. On the other hand, exports of semiconductors (-21%), petroleum products (-35%), petrochemicals (-12%), and steel (-11%) decreased compared to the previous year due to factors such as unit price declines. However, semiconductor exports, Korea's largest export item, increased by 15% from the previous month to $8.6 billion, continuing an improving trend since the first quarter low and showing the lowest export decline rate this year.

By region, exports to the United States (2%), the European Union (EU, 3%), and the Middle East (7%) turned positive, supported by strong performances in automobiles and general machinery. Exports to the US and EU recorded the highest August performance ever due to significant increases in automobile and general machinery exports.

Exports to China (-20%) and ASEAN (-11%) decreased as the decline in semiconductor prices and sluggish exports in these regions led to reduced imports of intermediate goods from Korea. However, exports to Vietnam, which accounts for 51% of ASEAN exports, turned to an increase thanks to strong display and general machinery exports. Despite concerns about economic slowdown in China, the decline rate eased to 20% from the previous month (-25%), recovering to the $10 billion level again. The scale of the trade deficit has been decreasing since March this year.

Last month, the import decline was steeper than the export decline. August imports fell by 22.8% due to decreased energy imports (-42%) such as crude oil (-40%), gas (-46%), and coal (-42%) following the drop in oil prices. Besides energy, imports of semiconductors, semiconductor equipment, and steel also continued to decline.

Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy said, "Since the trade balance turned to a surplus in June after 16 months, achieving three consecutive months of surplus amid difficult export conditions such as global interest rate hikes, delayed semiconductor industry recovery, and economic slowdown in China is the result of joint efforts by the public and private sectors to strengthen competitiveness in advanced and key industries, which is the top priority of economic policy for export expansion." He added, "Despite seasonal factors such as summer vacations, the positive export trend was maintained thanks to strong exports of key items like automobiles and general machinery and the improving trend in semiconductor exports."

The government plans to prepare support measures for export revitalization at the beginning of this month on a pan-government level. These measures will include ▲ diversification of export items and regions ▲ reinforcement of export support infrastructure such as trade finance, export marketing, and overseas certification ▲ resolution of on-site difficulties faced by export companies.

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