Korea Likely to Post Largest-ever Trade Deficit in 1st Half of 2022

Korea’s trade deficit, which started in March of this year, is highly likely to continue in June. Korea is expected to post the largest-ever semi-annual trade deficit in the first half of this year.

According to the Korea Customs Service, Korea's export amount (provisional value on customs clearance basis) from June 1 to 20 was US$31.283 billion, down 3.4 percent from the same period last year. During the same period, Korea’s imports amounted to US$38.925 billion, up 21.1 percent from the same period of 2021.

Korea's exports from Jan. 1 to June 20 stood at US$323.897 billion, an increase of 15.4 percent from the previous year, and imports swelled 26.8 percent to US$339.366 billion.

As imports outgrew exports, Korea’s trade balance stayed in the red. From June 1 to 20, Korea incurred a deficit of US$7.642 billion. As of June 20, Korea posted a cumulative yearly trade deficit of US$15.469 billion. During the same period of last year, it registered a trade surplus of US$13.186.

Korea’s trade deficit hit US$115 million in March, US$2.661 billion in April and US$1.71 billion in May. If Korea posts a trade deficit in June, it will the first four-month deficit streak since the January-April period of 2008.

The size of Korea’s trade deficit in the first half of 2022 is also likely to become an all-time high. According to statistics of the Korea International Trade Association, the second half of 1996 logged the largest trade deficit, US$12.550 billion, on a semi-annual basis since 1956.

Korea’s growing trade deficits were blamed on a sharp rise in the amount of international energy imports triggered by the Russian invasion of Ukraine. Imports of crude oil from June 1 to 20 amounted to US$6.06 million, up 63.8 percent from the same period of last year. Coal and gas imports stood at US$1,698 million and US$1,557 million, respectively, up 155.4 percent and 30.2 percent from the previous year. Korea’s three major energy imports as a whole inflated by 67.5 percent compared to the previous year.

According to Korea’s import and export statistics by item from June 1 to 20, Korea’s exports of passenger cars, one of Korea’s main export item, shrank by 23.5 percent compared to the previous year and those of wireless communication devices by 23.5 percent. Exports of semiconductors, Korea’s largest export item, grew only 1.9 percent. By countries, Korea’s exports to Taiwan ascended by 16.5 percent and those to Singapore by 54.9 percent. But those to China dropped by 6.8 percent, those to the United States by 2.1 percent, those to the European Union by 5.3 percent and those to Vietnam by 4.7 percent. .