From March last year to last month, South Korea's trade deficit continued for 15 consecutive months, but the deficit has decreased for four months in a row.
According to the "May Export-Import Trends" announced by the Ministry of Trade, Industry and Energy on the 1st, the trade balance recorded a deficit of 2.1 billion dollars last month. During the same period, exports (provisional customs clearance basis) amounted to 52.24 billion dollars, down 15.2% year-on-year, and imports were 54.34 billion dollars, down 14% due to this decline.
The number of working days during this period was 21.5 days, 1.5 days fewer than the same period last year (23 days). Considering the number of working days, the average daily export value was 2.43 billion dollars, down 9.3%.
Exports have been declining for eight consecutive months, but fortunately, the deficit has been continuously shrinking this year. An official from the Ministry of Trade, Industry and Energy explained, "May exports decreased due to fewer working days, continued sluggish IT industry conditions, and a base effect," adding, "Although the number of working days decreased compared to the previous month, the overall export volume increased, and the average daily export, excluding the impact of working days, recovered to the 2.4 billion dollar level for the first time since October last year."
The cumulative annual export value this year was 253.173 billion dollars, down 13.5% compared to the same period last year, and imports were 280.519 billion dollars, down 6.9%. Accordingly, the annual trade balance this year recorded a deficit of 27.346 billion dollars.
By item, exports of automobiles (49.4%), general machinery (1.6%), and anode materials (17.3%) increased, but exports of the largest export items such as semiconductors (-36.2%), petroleum products (-33.2%), and petrochemicals (-26.3%) decreased due to factors such as price declines compared to the previous year.
By region, exports to all six major regions decreased due to the reduction in working days. The decrease in exports to the US and EU this month was influenced by a base effect from last May's export performance. In the case of China and ASEAN, the delayed global economic recovery caused a decrease in imports from the world by Vietnam, the largest trading country within China and ASEAN, which also contributed to the export decline. However, exports to China in May recovered to the 10 billion dollar level, and the average daily export (494 million dollars) recorded the highest level since last October.
Imports decreased by 14.0% due to reduced energy imports (-20.6%) such as crude oil (-16.2%), gas (-20.2%), and coal (-35.1%). In addition to energy, imports of raw materials such as semiconductors and steel also continued to decline.
The government has forecasted that the trade balance could turn to a surplus as early as September. On the 22nd of last month, Jang Young-jin, the 1st Vice Minister of the Ministry of Trade, Industry and Energy, said at a meeting with reporters, "The scale of the trade deficit has been continuously decreasing monthly this year," and added, "I believe we will definitely ease public concerns in the second half of the year."
An official from the Ministry of Trade, Industry and Energy said, "To overcome the export crisis and improve the trade balance, we have been promoting the establishment of the 'National Advanced Industry Development Strategy,' raising the tax credit rate for investment in national strategic technologies, and conducting sales diplomacy," adding, "We plan to hold the 3rd Pan-Governmental Export Situation Inspection Meeting and a Digital Trade Roundtable in June to achieve a swift transition to a trade surplus."
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