Despite growing exports, South Korea’s trade deficit jumped to its highest level in 56 years in January, experts believe it could be a non-optimistic sign of the 2022 economy. Caused concern because of it.
According to data released on February 1, South Korea’s Ministry of Trade, Industry and Energy, South Korea’s exports in January were $ 55,320 million, up 15.2% year-on-year.
However, imports increased 35.5% year-on-year to $ 60,210 million, which is inferior to import growth.
Following the $ 590 million trade deficit last December, this is the first time South Korea has experienced a trade deficit for the second straight month since the 2008 financial crisis. In addition, the January trade deficit was $ 4.89 billion, the highest since the editing of trade statistics began in 1966.
According to the “record trade deficit” edited by the Korea Times on February 3, the ministry said that the January trade deficit was due to “temporary seasonal factors such as soaring energy prices and high winter demand.” Claimed to have been triggered.
Dubai Crude, one of the key benchmarks for oil price valuation, said in January last year that the ministry’s supporting data was released in the article “Korea’s record trade deficit arouses concerns about capital outflows” published by the Korea Economic Daily. While showing an increase of 51.8% compared to, prices of liquefied natural gas and coal soared 337.8% and 153.8%, respectively.
Difficult to reduce deficit
On the other hand, experts believe that various factors may be causing the deficit, and the government needs to actively work on economic measures.
Kim Jong-sik, an emeritus professor of economics at Yonsei University, said, “Most of the increase in exports is in commodities, not in volume.”
Don Kuncho, an emeritus professor of economics at Myongji University, wrote in the Chinese version of the Epoch Times that factors such as the prolonged US-China conflict, COVID-19 variants, and tensions between Russia and Ukraine have exacerbated world trade. Said.
“It will probably be difficult for South Korea’s trade deficit to return to the black as the United States could raise interest rates and South Korea’s largest trading partner, China, is slowing its economy,” he said. .. “Government should take preemptive actions such as diversifying imports, developing alternative energy sources and strategic stockpiling in case of the worst.”
South Korea’s exports have been steadily increasing for 15 consecutive months since November 2020, but export growth has slowed in recent months, according to statistics released by the Korea Customs Service.
In particular, the export growth rate dropped from 31.9% in November 2021 to 15.2% in January.
Based on last year’s exports, China and the United States account for 40% of South Korea’s exports, 25.2% and 14.8%, respectively.
Both countries are South Korea’s largest trading partners, and economic fluctuations in both countries are reflected in South Korea’s exports, especially after the International Monetary Fund (IMF) has lowered its economic growth forecasts for the United States and China in 2022 in the global economic outlook. Will be. October 2021.
In addition, due to the shortage of natural resources on the peninsula, South Korea relies heavily on raw material imports for the production of major exports such as semiconductors, petrochemicals and automobiles.
According to statistics released by the Federation of Korean Industries on Aju Business Daily, South Korea has a trade-to-GDP ratio of 29.3% with China in areas such as parts, parts and raw materials.
It is also worth noting that the Hyundai Institute predicts that for every 1% decrease in the growth rate of the Chinese economy, the growth rate of the Korean economy will decrease by 0.5%.