As of the 20th of this month, the cumulative trade deficit has surpassed $24 billion, exceeding half of last year's level (-$47.2 billion). Although imports of the three major energy sources?crude oil, gas, and coal?decreased by 15.5% compared to last month as the winter season ended, the recovery has been delayed due to semiconductor exports, the main export item, still plummeting by more than 40%.
According to the Korea Customs Service on the 21st, export value (provisional clearance basis) from the 1st to the 20th of this month was $30.945 billion, down 17.4% from the same period last year, while imports were $37.269 billion, down 5.7%. The number of working days during this period was 14.5, one day more than the 13.5 days in the same period last year. Considering the number of working days, the average daily export value was $2.13 billion, a decrease of 23.1%. Exports have been declining for six consecutive months from October last year to this month. Although imports decreased, the larger drop in exports resulted in a trade deficit of $6.323 billion as of the 20th of this month.
The cumulative export value for this year is $127.441 billion, and imports are $151.544 billion, down 13.4% and 1.3%, respectively, compared to the same period last year. Accordingly, the annual trade balance for this year recorded a deficit of $24.03 billion. This means that in about three months, the trade deficit has exceeded half of last year's total trade deficit. If the trade deficit continues until the end of this month, it will mark 13 consecutive months of deficit since March last year.
The prolonged trade deficit is due to the fact that while imports of the three major energy sources, which have accounted for a large portion of imports, have decreased, the decline in semiconductor exports, Korea's main export item, is still expanding. As of the 20th of this month, semiconductor exports amounted to $4.323 billion, down 44.7% compared to the same period last year. This marks eight consecutive months of shrinking exports since August last year (-7.8%). The sharp drop of over 40% in semiconductor exports is mainly due to the prolonged weakness in prices of memory semiconductors such as DRAM and NAND, which have a large export share, directly impacting the deterioration of Korea's exports.
Semiconductors are likely to remain sluggish in the second quarter as well. In the 'Export Industry Business Survey Index (EBSI),' which indicates companies' export business outlook, the semiconductor sector has continued its downward trend this year. After exceeding 100 in the third (114.3) and fourth quarters (112.0) of last year following the second quarter (88.1), it sharply dropped in the first (73.5) and second quarters (52.0) of this year. An EBSI value below 100 indicates a negative outlook among companies. Due to the semiconductor slump, there is an analysis that the export recovery in the second half of the year is unlikely to be significant.
The prolonged trade deficit with Korea's largest trading partner, China, which has lasted for 10 months, is also a negative factor. As of the 20th of this month, exports to China were $6.184 billion, down 36.2% compared to the same period last year. Although the reopening effect of China's economic activities has appeared this month, it has not yet translated into visible export growth. Exports to other major regions also showed a decline during the same period. Exports to the European Union (-8.9%), Vietnam (-28.3%), Japan (-8.7%), and India (-3.1%) all decreased respectively.
During this period, imports of the three major energy sources (crude oil, gas, coal) amounted to $8.996 billion, down 15.5% compared to the same period last month ($10.648 billion). Coal imports ($1.386 billion) increased by 19.4%, but crude oil ($4.896 billion) and gas ($2.714 billion) decreased by 10.3% and 23.1%, respectively. Although energy imports have significantly decreased, if the semiconductor export recovery remains slow, it is widely expected that improving the trade balance will be difficult until the first half of this year. According to the OECD's 'Interim Economic Outlook,' Korea's economic growth forecast for this year has been revised down by 0.2 percentage points from 1.8% to 1.6%.
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