Korea reports trade deficit for 13th consecutive month in March

Containers being loaded at a port in Incheon on March 21. [NEWS1]

Korea continued to report a trade deficit for 13 consecutive months in March, weighed down by the combination of plunging chip demand and a slowing global economy.

The monthly trade deficit came in at $4.62 billion, compared to January’s record deficit of $12.7 billion, driven by weak exports in the semiconductor sector, which is Korea’s largest export.

Korea reported a negative balance for the 13th consecutive month, the longest string of negative readings since the 1997 crisis. The monthly trade deficits combined so far this year are equal to 47.8 percent of the total trade deficits logged last year.

In March, exports declined 13.6 percent on year to $55.1 billion, according to the Ministry of Trade, Industry and Energy on Saturday. This is the the sixth consecutive month of an on-year decline in exports.

However, the ministry believes the trade balance is showing signs of recovery as the monthly exports surpassed $55 billion for the first time since last September.

Weak semiconductor demand as well as the high base effect from March last year had pulled the figure down.

Chip exports declined 34.5 percent on year to $8.6 billion, affected by the plunge in prices of DRAMs and NAND flash memory chips as demand weakened and inventories piled up. The figure has been declining for eight consecutive months.

Display exports shrunk 41.6 percent to $1.22 billion, while petrochemicals were down 25.1 percent to $4.09 billion.

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.

Car exports, on the other hand, came in at a record monthly figure of $6.52 billion, up 64.2 percent on year, due to strong demand for new electric vehicles and SUVs.

Imports decreased 6.4 percent on year to $59.8 billion due to a decrease in energy imports in fuel and gas.

“To recover from the trade deficit, it’s essential to transition to a highly efficient energy structure which takes up a large part of import,” Trade, Industry and Energy Minister Lee Chang-yang said.

Overall, exports to China plunged 33.4 percent to $10.4 billion, those to the EU were down 1.2 percent to $6.14 billion, and those to Japan were down 12 percent to $2.44 billion. Exports to the Middle East increased 21.6 percent to $1.84 billion while those to the United States inched up 1.6 percent to $9.79 billion.

The ministry will also focus its budget to support exports in the first half of this year and help small- and medium-sized enterprises that do not have experience in the area to come up with a corporate structure to export their products, the industry minister added.

“New, cooperative diplomatic relations between Japan and Korea is a new business opportunity to expand the stream of export revenue," Lee said.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]