The accumulated trade deficit between January and May stood at $7.85 billion. It is the largest since the Asian financial crisis in 1997. The photo shows the view of Incheon New Port in Songdo-dong, Incheon, where container shipments are taking place on the 1st. News 1
The accumulated trade deficit from this year to last month stood at $7.85 billion. As of January to May, it was the largest trade deficit in 25 years following recording a deficit of $9.26 billion during the 1997 Asian financial crisis. Exports continued to rise this year, but imports increased as the price of energy and raw materials such as oil, gas and coal soared due to the Ukraine crisis.
According to the ‘May Import and Export Trends’ released by the Ministry of Trade, Industry and Energy on the 1st, exports last month amounted to $61.52 billion, up 21.3% from a year ago. It was the largest in the history of May and the second largest in the history of the month following March ($63.8 billion). Imports rose 32.0% to $63.22 billion, the second highest in history on a monthly basis.
As a result, the trade balance recorded a deficit of 1.71 billion dollars last month. It is the second consecutive month of losses following April ($2.51 billion). The trade balance recorded a deficit in January and turned to a surplus in February and March, but turned to a deficit once more in April.
Soaring oil, gas, coal… Trade deficit already reached 7.8 billion won
The trade environment deteriorated due to the Russo-Ukraine war despite the export of major items from Korea
The increase in the trade deficit this year is due to a surge in energy prices. Last month, imports of the three major energy sources – oil, gas and coal – amounted to $14.75 billion, up $6.76 billion (84.5%) from a year earlier. The increase in imports of the three major energy sources was larger than the trade deficit of 1.71 billion dollars last month.
According to the Ministry of Trade, Industry and Energy, the price of Dubai oil jumped 97.4% from an average of $54.8 per barrel in May last year to $108.2 per barrel in May this year. The price of liquefied natural gas (LNG) also rose from $7 to $32.9 per Mmbtu (caloric unit) during this period, and the price of Australian coal rose from $106 to $404.8 per Mmbtu.
Although exports have recorded double-digit growth for 15 consecutive months since March, analysts say that the trade environment is deteriorating. This is because energy and raw material prices have soared, and concerns regarding a global economic downturn are growing due to the US tightening monetary policy and China’s lockdown measures. The Ministry of Trade, Industry and Energy announced on the 1st in the data of ‘May Import and Export Trends’ that “the concern over the continuing deficit is growing.” Even at the beginning of this year, the trade deficit was evaluated as a ‘temporary phenomenon’, but the situation became more serious than initially expected. The Korea Institute for Industrial Economics and Trade expects the trade deficit to reach $15.8 billion this year.
Minister of Industry Lee Chang-yang said, “Korea, which has achieved economic growth centered on exports due to global low growth, inflation and deepening supply chain instability, is in a serious situation both internally and externally. While concentrating on our capabilities, we will thoroughly analyze the financial and logistics situation faced by companies and do our best to support exports, including specialized support for each industry.”
By Jung Eui-jin, staff reporter justjin@hankyung.com
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