The trade deficit in the first half of the year reached an all-time high of $10.3 billion, as imports continued to run in a deficit more than exports from April to June this year, the Ministry of Trade, Industry and Energy and the Korea Customs Service announced yesterday. It is the first time in 14 years since the 2008 financial crisis that the trade deficit continued for three months in a row.
The worst trade deficit in history is due to supply shortages caused by the Ukraine war and soaring energy and raw material prices. In one year, the price of crude oil rose 1.6 times, the price of gas 3.3 times, and the price of coal 3.5 times. On the other hand, exports, which showed double-digit growth for 15 consecutive months, only increased by 5.4% last month. The Ministry of Trade, Industry and Energy analyzed, “The export of automobiles and general machinery decreased as production and shipments were disrupted due to the strike by the cargo coalition.” A red light was lit on the trade report as it was shocked by external factors and overlapped with internal problems.
The problem is that such a trade deficit is not a temporary phenomenon, but is showing signs of becoming chronic. Currently, trade conditions in Korea have deteriorated significantly due to the sluggish U.S.-China economy and the continuing global logistics crisis. As oil prices continue to rise and energy demand in the summer is surging, the deficit may widen. If global inflation and supply chain instability are entrenched, it will be difficult for Korea to find a way out. Companies already anticipate that exports will decrease in the electrical and electronics, steel and petrochemical industries, which are their main fields in the second half of this year.
As concerns over a global economic slowdown and a trade deficit shock struck, the KOSPI fell below 2,300 during the day for the first time in 18 months. If Korea, which is highly dependent on trade, fails to turn its trade surplus into a surplus, the overall economy may stagnate. The government yesterday announced measures to support export to SMEs, such as the expansion of a joint logistics center for small and medium-sized enterprises and the operation of an online permanent exhibition hall, but the current trade crisis is not a problem that can be solved with such a short-term response. Relevant authorities should jump into the trading scene and listen to the difficulties of companies. An omni-directional support system must be put into operation immediately to get out of the cycle of chronic trade deficit and low growth.