Trade Deficit Surpasses $30 Billion for the First Time in History

Semiconductor Exports Down 20.6% YoY
Due to Increased Energy Import Costs

As the trade deficit continued until the 10th of this month, the cumulative trade deficit for this year surpassed $30 billion for the first time in history. The main factors were the decline in exports of key items such as semiconductors, which are the backbone of the Korean economy, due to the global economic slowdown, and the increase in energy import costs.

According to the Korea Customs Service on the 11th, the cumulative trade deficit from the beginning of this year until the 10th of this month reached $32.714 billion, the highest since trade statistics began in 1956. The trade deficit reached $25.182 billion in August this year, surpassing the previous record deficit of $20.623 billion set in 1996, and increased by $5 billion within two months.

Exports from the 1st to the 10th of this month amounted to $11.797 billion, down 20.2% compared to the same period last year, while imports during the same period also decreased by 11.3% to $15.622 billion. Although the number of working days was reduced by 0.5 days due to the National Foundation Day holiday (1st?3rd) and Hangeul Day holiday (8th?10th), the fact that the average daily export value decreased by 12.2% compared to the previous year is a concerning indicator. If the total exports for this month decline, it will mark the first decrease in two years since October 2020.

In particular, exports of semiconductors, the main export item, sharply dropped by 20.6% to $2.227 billion during the same period. Along with this, other major export products such as steel products (down 36.1%), home appliances (down 29.9%), and petroleum products (down 21.3%) also fell by double digits. Exports to major trading partners China (down 23.4%) and the United States (down 21.4%) also decreased. During this period, the trade deficit with China was $459 million, and the trade balance with the U.S. also recorded a deficit of $102 million.

Meanwhile, due to the impact of rising energy prices, imports of crude oil (up 7.6%) and coal (up 10.4%) continued to increase, but the average daily import value from the beginning of this month until the 10th decreased by 2.4%.