Imports top exports in December

Korea recorded a trade deficit in December for the first time in almost five years, in large part due to sky-high oil prices, raw material price hikes and a downturn in semiconductor prices, the Ministry of Commerce said yesterday.
Exports for the month totaled $33.2 billion, up an annualized 15.5 percent. But the year-on-year 24 percent increase of imports to $34.1 billion resulted in a trade deficit of $865 million. The country last saw a monthly trade deficit in March 2003.
The trade deficit resulted from a 40 percent gain in imports of crude oil and gas, and an 80 percent drop in prices for semiconductors compared to the year before, according to the ministry. The import price of crude oil averaged $86 per barrel in December 2007, marking a jump of 52.3 percent from a year earlier.
Oh Jung-kyu, head of the ministry’s trade investment promotion division, said 2007 exports were propelled by strong overseas demand for general machinery, liquid crystal displays, mobile telecommunication equipment, ships, petrochemicals, steel and automobiles. General machinery exports rose 29.5 percent. The exports of ships, automobiles and mobile telecommunication equipment advanced 25.1 percent, 13.3 percent and 12.1 percent, respectively.
The increase in imports was triggered by demand for raw materials and capital goods needed to make products for both domestic consumption and exports. Raw material imports rose 16 percent year-on-year, while the import of steel products soared 39.8 percent.
Exports rose 14.2 percent year-on-year in 2007 to $371.8 billion, posting double-digit annual growth for five consecutive years. Imports climbed an annualized 15.3 percent to $356.7 billion. The year’s trade surplus stood at $15.1 billion.
But the growth of both imports and exports will slow down this year, the ministry forecast. It predicted that exports will increase 11.6 percent to total $415 billion, and imports will pick up 12.7 percent to $402 billion, creating a trade surplus of $13 billion. That is smaller than the 2007 figure.
“The possibility of the U.S. Fed further slashing its benchmark interest rates persists, an additional burden on top of fluctuating international oil prices,” Oh said.

By Seo Ji-eun Staff Reporter [spring@joongang.co.kr]