Korea reports record trade deficit on chip rout

Economy

Published: 01 Feb. 2023, 18:09 Updated: 01 Feb. 2023, 19:10

Korea reports record trade deficit on chip rout

Containers being loaded at a port in Incheon on Jan. 25. [NEWS1]

Korea reported its largest trade deficit ever in January as chip sales and chip prices plunged.

The minus $12.69 billion balance is the 11th consecutive monthly deficit and the longest string of negative readings since the 1997 crisis.

Exports fell 16.6 percent on year to $46.27 billion, while imports inched down 2.6 percent to $59.96 billion in the first month of 2023, according to a preliminary data from the Ministry of Trade, Industry and Energy released on Wednesday.

“Exports declined in January amid the spread of downside risks in the global economy, including high interest rates, inflation and the Russia-Ukraine war,” Trade, Industry and Energy Minister Lee Chang-yang said. “The export fall in January was caused by reduced import demand in key countries as a result of economic slowdown and the fall of semiconductor prices.”

Semiconductor exports were down 44.5 percent on year to $6 billion, petrochemicals 25 percent to $3.8 billion and displays 36 percent to $1.3 billion.

Chip exports were affected by the plunge in prices of DRAMs and NAND flash memory chips as demand weakened and inventories piled up. System chips exports, which had been holding up, turned negative in January.

Display exports shrunk from the falling unit prices of OLED products. Exports of home appliances also fell as high interest rates dragged down consumer spending in developed countries.

In the same period, exports of automobiles grew 21.9 percent to $5 billion, a historic high for January, on the popularity of eco-friendly cars, SUVs and high value-added vehicles. Exports in shipbuilding soared 86.3 percent to $1.4 billion as overseas demand for large container ships and LNG carriers jumped.

Exports of wireless communication devices grew for the first time in 10 months.

Overall, exports to the EU were up 0.2 percent to $5.4 billion and to the Middle East 4.0 percent to $1.46 billion. But exports to China plunged 31.4 percent to $9.17 billion, while exports to the United States fell 6.1 percent to $8.05 billion.

“The recent export slowdown is commonly seen in countries with strong exports with heavy reliance on energy imports, like China, Japan and Germany,” the ministry said.

Imports fell two months in a row as imports of raw materials for chips and steel fell. But imports of energy continued to stay high. Crude oil imports grew 10 percent on year, while gas imports increased 6 percent and coal 0.3 percent.

“As external uncertainties persist, the government will do its best to support exports,” added Lee.

The government forecast this year’s exports to fall 4.5 percent after posting a 6.1 percent gain last year.

BY JIN MIN-JI [jin.minji@joongang.co.kr]