Korea’s 2022 trade deficit marks record high of $47.2 billion

Economy

Published: 01 Jan. 2023, 16:25

Korea’s 2022 trade deficit marks record high of $47.2 billion

Cargos are stacked on a foggy port in Busan on Sunday. Korea’s 2022 trade deficit came in at a record high $47.2 billion, according to the Ministry of Trade, Industry and Energy. [SONG BONG-GEUN]

Korea’s 2022 trade deficit came in at a record high $47.2 billion, the Ministry of Trade, Industry and Energy said Sunday.

This is the first time in 14 years for Korea to see trade deficit since 2008 and more than double the previous record of $20.6 billion in 1996.

The deficit was mainly due to spiking energy prices that exceeded the record export amount that Korea logged last year, according to the trade ministry.

Annual exports stood at $683.9 billion in 2022, up 6.1 percent compared to the previous year and the highest ever since the government started compiling export figures in 1956. The previous record was in 2021 when Korea saw $644.4 billion in outbound shipments.

However, annual inbound shipments came in at $731.2 billion last year, 18.9 percent more than 2021 due to supply chain uncertainties that continued throughout the year.

Korea depends on imports for most of its energy needs. The country's energy imports surged more than 40 percent on-year to $190.8 billion in 2022, the ministry said.

For December, monthly exports fell 9.5 percent on-year to stand at $54.99 billion, extending the losing streak to the third consecutive month.

Imports decreased 2.4 percent on-year last month to $59.68 billion, and the monthly trade deficit came to $4.69 billion.

Imports have exceeded exports in Korea since April, and it is the first time since 1997 that the country has suffered a trade deficit for nine months in a row.

“Energy inflation led by the Russia-Ukraine war has resulted in massive imports for energy, which resulted in $47.2 billion in trade deficit,” the ministry said in a press release. “However, such deficit induced by energy import has been observed in major countries with strong exports based on manufacturing sectors around the world, including Japan and Germany.”

Strong exports were backed by Korea’s major export champions such as semiconductors, cars and petro products.

A total of $129.2 billion of semiconductors were shipped off last year, 1 percent more than the year prior, the highest ever despite a fall in chip prices in the latter half of the year. Exports of petro products soared by 65.3 percent upon rising oil prices globally to reach $63.0 billion, followed by $54.3 billion of petrochemicals and $54.1 billion of cars.

Auto exports advanced 16.4 percent to $54.1 billion last year as a global shortage of automotive chips eased and demand for eco-friendly cars rose across the world. Exports of secondary cells jumped 15.2 percent on-year to $9.99 billion, the data showed.

By nation, exports to China, Korea's largest trading partner, fell 4.4 percent on-year to $155.81 billion in 2022 amid its strict zero-Covid-19 policy.

But sales in the Association of Southeast Asian Nations (Asean) increased 14.8 percent to an all-time high of $124.95 billion, and those to the U.S. rose 14.5 percent to a record high of $109.82 billion led by strong demand for vehicles and cells, in particular.

Exports to the European Union nations also set a record high of $68.13 billion by rising 7.1 percent on-year, the data showed.

Sales in India and the Middle Eastern nations marked a double-digit growth to come to $18.88 billion and $17.51 billion, respectively.

Exports bound for the Commonwealth of Independent States retreated 17.7 percent to $11.28 billion last year amid the Russia-Ukraine war, the ministry said.

"Dwindling exports and a large deficit have weighed down our economy. We take the current situation seriously and will mobilize all possible capabilities to prop up exports," Industry Minister Lee Chang-yang said.

The government vowed to expand trade financing and devise strategies to expand the country's presence in emerging markets and resources-rich nations. Its focus will also be on how to boost exports in such "promising" fields as nuclear power generation, plant construction and military items, he added.

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