South Korean Trade Deficit Biggest Ever Since 1956 with Crumbling Won and High Energy Prices

South Korea for the full year of 2022, the trade balance posted a deficit of USD 47.2 billion, more than double of the previous record deficit of USD 20.72 registered in 1996, and the biggest ever figure since 1956. The trade deficit in South Korea surged to USD 4.69 billion in December 2022 from USD 0.43 billion in the same month a year earlier a preliminary figure showed. However, it was smaller than the market consensus of a 6.74 billion gap. Intense cost pressures have seen nine consecutive monthly trade shortfalls.

South Korea Industry

Exports are dropping more than imports, as demand at home and abroad deteriorated due to as demand at home and abroad deteriorated due to intense cost pressures and a spike in COVID cases in some countries, particularly in China, South Korea’s biggest trading partner.


South Korea Balance of Trade

South Korea Exports Fall Less than Expected.

Exports from South Korea dropped 9.5% from a year earlier to USD 54.99 billion in December 2022, after a 14% plunge in the previous month, and compared with market expectations of a 10.1 percent fall, a preliminary figure showed.

It was the third straight month of decline in exports, amid deteriorating foreign demand as inflation pressures persist globally and the impact of economic slowdown in China, South Korea’s biggest trading partner.

  • For the full year of 2022, exports climbed 6.1% to a record peak of USD 683.9 billion, mainly due to a rise in sales of semiconductors and petrol products, as well as electric vehicles and secondary cells.
  • Sales were up for chips (1%), semiconductor (20%), petroleum (65.3%), and auto (16.4%). Shipments rose to the US (14.5%), the ASEAN countries (14.8%), the EU (7.1%), while fell to China 4.4%).
  • The government projected shipments in 2023 to fall 4.5%, attributed to a global economic slowdown and weak chip prices.

South Korea Imports Drop More than Expected.

Imports to South Korea fell by 2.4% from a year earlier to USD 59.68 billion in December 2022, compared with market forecasts of a 0.6% fall and after being up 2.7% a month earlier, preliminary data showed.

This was the first decrease in imports since November 2020, amid a surge in COVID cases in China, South Korea’s top trading partner, and supply chain disruptions.

  • For the whole year of 2022, purchases jumped 18.9% yoy to USD 731.2 billion
  • Energy imports surging more than 40% to USD 190.8 billion on the back of high commodity prices and the weak won.

Source: Statistics Korea, Ministry of Trade, Industry & Energy (MOTIE)

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