Korea enjoys export boost to Japan
Korea’s trade deficit with Japan fell last year from 2010 mainly due to the massive earthquake there in March that disrupted production and the strength of the Japanese currency, which made imports cheaper, a report said yesterday.
Korea’s exports to the neighboring country jumped 41.3 percent to $360.3 billion in the January to November period last year, while imports grew 7 percent to $624.3 billion, according to the report by the Korea International Trade Association (KITA).
Seoul’s trade deficit with the world’s third-largest economy amounted to $264 billion over the 11-month period, down from a $361-billion shortfall recorded in the same period in 2010, the KITA report said.
The report said the spike in exports was buoyed by the powerful earthquake early last year that crippled factory operations and caused Japanese companies to order Korean products.
Park Ki-im, a research fellow at KITA, said last year’s figure is significant given that it broke the long-held perception that Korea’s trade deficit with Japan grows whenever more Korean goods are exported worldwide.
“Given that Korean exports surpassed the watershed $500 billion mark for the first time, it is [unusual] that the trade deficit with Japan was narrowed,” Park said. “Korea heavily relies on Japanese components and industrial materials to make products. So whenever more Korean products are exported overseas compared to the previous year, the country traditionally suffers from a growing trade deficit.”
Japanese firms have also increased their imports of cheaper Korean goods as the Japanese yen rose nearly 15 percent in three years. The Japanese currency was trading at around 76 yen against the U.S. dollar as of yesterday.
Petrochemical products and mobile devices were among the major export items, with their trade surplus reaching $6.5 billion and $1.8 billion, respectively.
The balance of trade in many machinery and raw material sectors, including lighting and synthetic rubber, was also in positive territory during the 11-month period.
The findings, however, showed shortfalls in key industrial parts and materials sectors, which account for 78.5 percent of the country’s overall trade deficit with Japan, as Korean firms continued to rely heavily on Japanese goods despite rising import prices.
Korea imports many components, industrial materials and precision machinery from its neighbor. “While exports of raw materials to Japan are expected to slow this year, power plant facilities, auto parts, food and fashion sectors will lead its export drive to Japan,” Park said.
By Kim Mi-ju, Yonhap [firstname.lastname@example.org]
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