South Korea has just logged its worst trade deficit in its history, with imports exceeding exports by nearly $10 billion in the year 2019. This is the first time in 13 years that the country is facing a negative trade balance, a trend that is being blamed on decreasing global demand for electronics and other exports.
Exports of semiconductors and other manufactured goods, which have historically been amongst the largest contributors to South Korea’s export revenue, fell 7.7% in 2019. This downward trend in exports was driven by slowing worldwide demand for memory chips, as well as an increase in competition from Chinese companies in the mobile phone and high-tech equipment markets.
At the same time, imports to South Korea rose by 6.1% due to buying of raw materials and machinery. As a result, the country recorded a trade deficit of $9.98 billion. Meanwhile, the Ministry of Trade, Industry and Energy predicted that the trade deficit could increase further in 2020, with both exports and imports seeing a 0.4% decline.
The decline in exports has had a considerable impact on the South Korean economy. It has weakened the value of the South Korean won which has fallen against the US dollar and other major currencies. This has caused export-dependent companies to suffer from falling margins, as the higher costs of exports cancels out much of the pricing benefits of a weaker won.
South Korean officials have also warned that the current economic situation could lead to an increased unemployment rate and an overall weakening of economic growth. The government has vowed to intervene by increasing support for key industries and by providing incentives for companies to maximize export opportunities.
Ultimately, the trend of decreasing exports is likely to continue in the near future as the global trade environment still remains uncertain. While the impact on South Korea’s GDP and overall economic performance could be moderated by government convictions, without an increase in global demand, the country is on track to log a record trade deficit in the coming years.
SEOUL, South Korea (AP) — South Korea logged its biggest month to month trade deficit ever, at $12.7 billion in January, as exports of pc chips and other high-tech merchandise sank and charges for importing oil and fuel surged, the trade ministry stated Wednesday.
The escalating shortfall underscored how Russia’s war on Ukraine is straining the international economy, maintaining costs for crucial resources like crude oil and nickel substantial even right after they fell again from spikes…
SEOUL, South Korea (AP) — South Korea logged its most important month to month trade deficit at any time, at $12.7 billion in January, as exports of laptop chips and other substantial-tech items sank and charges for importing oil and gasoline surged, the trade ministry mentioned Wednesday.
The rising shortfall underscored how Russia’s war on Ukraine is straining the international financial state, trying to keep costs for critical means like crude oil and nickel significant even soon after they fell again from spikes in 2022.
South Korea’s export-dependent economy has logged a deficit for 11 consecutive months, the longest streak due to the fact 1997 when it was on the cusp of the Asian economic crisis.
Exports of personal computer chips, South Korea’s most essential product or service, declined by almost 45% previous thirty day period from a year earlier because of slowing demand and slipping chip selling prices, according to South Korea’s Ministry of Trade, Market and Vitality.
The trade facts was launched soon after South Korean chip huge Samsung Electronics noted that its revenue for the previous quarter plunged by just about 70% in what it described as a “significantly” deteriorated company setting for its semiconductors and customer electronics items.
Chip generating is remarkably cyclical, and tech industries have swung from stark shortages for several laptop chips, felt across numerous industries such as automaking, to a glut.
Samsung said chip rates fell sharply amid weakened need as shoppers altered their inventories in experience of “deepening uncertainties” in the world wide overall economy, a dilemma the enterprise says will likely prolong by means of this quarter.
On Wednesday, SK Hynix, another main South Korean chipmaker, noted an operating decline of 1.7 trillion gained ($1.4 billion) for the Oct-December period, which marked its initial quarterly deficit because 2012.
“With uncertainties however lingering, we will keep on to reduce investments and expenses, while trying to minimize the effects of the downturn by prioritizing marketplaces with substantial growth possible,” the company claimed in a statement.
SK Hynix declared programs in October to reduce its investments in 2023 by extra than a fifty percent as opposed to the 19 trillion received ($15 billion) it used in 2022.
The trade ministry claimed the country’s exports during January declined by nearly 17% from a 12 months earlier, with the modest boost in the profits of cars, petroleum products and ships failing to offset the bigger drop in semiconductor shipments.
The region, which relies upon on imports to provide most of its electrical power provides, invested just about $16 billion paying for fuel, fuel and coal past thirty day period. This was noticeably increased than the normal of $10 billion the place spent to import people things throughout the Januarys of the former 10 decades, senior trade formal Moon Dong-min claimed.
“The worldwide economy continues to be sluggish, due to the contractionary procedures of big economies and the prolonging of Russia’s war on Ukraine,” Moon claimed in a briefing.
He mentioned the war, which has remaining nations around the world grappling with increased rates and slower advancement, has taken a very similar toll on other economies dependent on industrial exports, including China, Japan and Germany.
Moon stated the world wide semiconductor sector will possible keep on being sluggish in excess of the next few months before recovering in the later half of the yr adhering to the depletion of existing inventories.
“If the exports of semiconductors get better, that would be a substantial support in permitting our (country’s) exports recover,” Moon explained.
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