The Largest since 2000
Korea’s trade deficit in the first five months of this year has crossed US$7.8 billion. The figure is US$1.5 billion larger than the same period in 2008 when a financial crisis hit the world. It is the largest since 2000 when the Korea Customs Service began computerizing related statistics.
According to the import and export data for May announced by the Ministry of Trade, Industry and Energy on June 1, Korea’s trade balance stood at a deficit of US$1.71 billion in May. As a result, the cumulative trade deficit from January to May expanded to US$7.842 billion. In the same period last year, Korea logged a trade surplus of US$12.95 billion.
The figure is larger than the US$6,339.75 million deficit recorded in the January-May period of 2008 when the global financial crisis occurred. Over the past 22 years, Korea logged a trade deficit during the Jan.-May period only in 2008 and this year.
The figure may be an all-time high. The Korea Customs Service has been compiling trade statistics since 1956. In 1996, Korea posted an annual deficit of US$20.6 billion, the largest ever amount. The trade deficit in the January-May period of that year reached US$7.5 billion.
Although Korea recorded the highest May export figure and the second-highest monthly export figure in history, its trade balance deteriorated as imports exceeded exports. Exports in May stood at US$61.5 billion, an increase of 21.3 percent from the same month of 2021. The figure exceeded the May export record set last year by more than US$10 billion and achieved the highest monthly performance, topping the previous high of US$63.8 billion set in March 2022.
However, soaring energy and raw material prices significantly boosted the amount of Korea’s imports, offsetting its brisk exports. Imports in May totaled US$63.22 billion, up 32 percent from a year earlier. A situation in which the growth of imports outruns that of exports has continued for 12 months since June last year. In addition, imports exceeded the US$60 billion mark every month except for February (US$53.1 billion) of this year.
Korea’s imports of the three major energy sources, oil, gas and coal, amounted to US$14.7 billion, exceeding US$8 billion a year ago by more than US$6 billion. In May, the international oil price based on Dubai crude oil hit US$108.16 per barrel, and the LNG price stood at US$32.94 per mmbtu (caloric unit), showing a continuous upward trend from the beginning of the year. There is no sign of stopping the increase in imports due to rising prices of raw materials such as oil and LNG. In particular, the price of Australian standard coal is at US$404.77 per ton, an unprecedented level. The highest monthly coal import record was renewed in May.
Prices of agricultural products are also on the uptick due to the spread of food protectionism and unfavorable factors in granaries such as the worsening of the Ukraine crisis, droughts in North America and Argentina, and poor sowing due to coronavirus lockdowns in China. Imports of agricultural products such as wheat and corn amounted to more than US$2 billion for the past three months in a row: US$2.45 billion in March, US$2.41 billion in April and US$2.42 billion in May.