Korea posts first trade surplus in 16 months

A container terminal located in Busan on July 2. Korea reported its first trade surplus in 16 months while its outbound shipments fell for nine months in a row due to weak demand for chips. [YONHAP]

Korea reported a trade surplus in June for the first time in 16 months, but its outbound shipments fell for the ninth consecutive month due mainly to weak demand for semiconductors, the industry ministry said Saturday.

Outbound shipments fell 6 percent on-year to US$54.24 billion last month, according to the data compiled by the Ministry of Trade, Industry and Energy.

The decline came as exports of semiconductors, the country's key export item, sank 28 percent on falling demand and a drop in chip prices.

But June saw the smallest on-year export decline so far this year, possibly indicating that the country's exports may rebound in the second half of this year.

The nation's outbound shipments sank 15.2 percent in May following a 14.4 percent decline the previous month.

Exports have marked an on-year drop since October last year amid aggressive monetary tightening by major economies to curb high inflation and an economic slowdown. It is also the first time since 2020 that exports have declined for nine months in a row.

Imports fell 11.7 percent on-year to $53.11 billion in June, as energy imports went down 27.3 percent on-year, the ministry said. Korea depends on imports for most of its energy needs.

Accordingly, the country logged a trade surplus of $1.13 billion last month, ending a 15-month shortfall.

Imports exceeded exports in Korea from March 2022 through May 2023 on high energy prices, and it is the longest trade deficit the country has suffered since 1997.

The accumulated trade deficit in the January-June period came to $26.21 billion, the data showed.

By sector, exports of chips dropped 28 percent on-year to $8.9 billion, and the country's chip sales have logged an on-year decline since August last year.

But the exports by value in June reached the highest monthly level so far this year, the data showed.

Exports of petrochemicals went down 22 percent to $3.56 billion, and those of petroleum products declined 40.9 percent to $3.3 billion in June on falling prices.

Exports of display items dropped 11.1 percent to $1.4 billion, and global sales of bio and health products went down 6.1 percent to $1.3 billion.

But car exports spiked 58.3 percent on-year to $6.23 billion last month, and those of auto parts reported a 5.7 percent rise to $1.99 billion.

Exports of machinery added 8.1 percent to $4.47 billion, and steel exports grew 3.1 percent to $3.38 billion.

Sales of ships soared 98.6 percent to $2.48 billion. Overseas shipments of secondary batteries also climbed 16.3 percent to $920 million.

By destination, shipments to China, the top trading partner, fell 19 percent to $10.5 billion in June on a global economic slowdown, though the shipments surpassed the $10 billion level for the second month in a row.

Exports to the United States also marked a 1.8 percent fall to $9.59 billion due to a high base effect.

Shipments to the Association of Southeast Asian Nations (ASEAN) retreated 16.6 percent to $8.58 billion on weak demand for semiconductors and other items.

ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam.

But exports to the European Union jumped 18.2 percent to $6.19 billion, and those to Central and South American nations rose 9.2 percent to $2.54 billion.

Those to Middle Eastern nations increased 14 percent to $1.64 billion last month, the ministry said.

The government set this year's export target at $685 billion, up 0.2 percent from last year's total, though the finance ministry earlier forecast exports would mark a 4.5 percent on-year decline in 2023.

Yonhap