2022 trade deficit could hit $48 billion, says KERI

Economy

Published: 02 Oct. 2022, 15:39 Updated: 02 Oct. 2022, 16:17

2022 trade deficit could hit $48 billion, says KERI

Containers are stacked at the port in Busan on Sept. 21. Korea may suffer a trade deficit of $48 billion this year, a record, according to a report by the Korea Economic Research Institute (KERI) on Sunday. [NEWS1]

Korea may suffer a trade deficit of $48 billion this year, a record, according to a report by the Korea Economic Research Institute (KERI) on Sunday.

That would be 132 percent higher than the previous record of $20.6 billion in 1996, a year before the Asian financial crisis broke out, according to KERI, a think tank run by the Federation of Korean Industries (FKI).

This is also the first time since 1997 for Korea to have negative trade balances for six consecutive months.

A weakening won usually would have boosted exports, but raw material and energy prices are rising at a faster pace, according to KERI.

“Despite the currency falling at a fast pace, the trade deficit is growing due to raw material prices rising internationally, bringing up import prices,” KERI said in a press release.

Korea has seen trade deficits for six straight months since April. As of Sept. 20, the year-to-date trade balance is negative $29.2 billion.

With chip prices falling and energy prices rising, the trade deficit for the second half of the year is estimated by KERI at $37.5 billion, on top of a $10.3 billion deficit for the first half. Korea imported $18 billion of energy — including crude oil, gas and coal — in September, 81.2 percent more than the same month in 2021, according to the Ministry of Trade, Industry and Energy.

“Policies aimed at stabilizing the currency need to take place, such as currency swaps with major countries and stabilizing the supply chain, since the current trade deficit has been influenced the most by high import prices,” said Choo Kwang-ho, the FKI's economic research division head.

“The National Assembly needs to pass revisions to the tax law to lower corporate taxes in order to stop companies' profitability from deteriorating more."

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]