South Korea runs trade deficit as import costs rise during war in Ukraine | Business and economy
The export-dependent economy saw its imports hit a record $63.62 billion in March, driven by purchases of crude oil, gas and coal.
South Korea’s trade balance turned into a deficit in March as the sharp rise in the price of energy and raw material imports caused by supply difficulties and the war in Ukraine offset the windfall gains in exports.
Exports in March rose 18.2% from a year earlier to a record $63.48 billion, Commerce Department data showed on Friday, beating an expected growth of 17.5% in a Reuters poll, but slower than February’s 20.6%. Exports extended their gains for 17 straight months.
“March exports turned out better than expected and helped avoid a larger trade deficit, although external risks such as the Russia-Ukraine crisis continued to add pressure,” Park Sang- said. hyun, chief economist at Hi Investment & Securities.
“Despite concerns over the outlook for the chip industry, semiconductor exports remained strong, supporting the overall data.”
Friday’s data showed shipments of semiconductors, the country’s biggest export earner, stood at a record $13.12 billion, while those of petrochemicals also hit a record 5 .42 billion.
By destination, exports to China, South Korea’s largest trading partner, rose 16.6%, and those to the United States rose 19.9%.
“Dodged the Worst”
Imports, meanwhile, jumped 27.9% to a record $63.62 billion, with a combined value of $16.19 billion worth of crude oil, gas and coal imports in head. This took the trade balance to a deficit of $140 million, after posting a surplus of $831 million in February.
Cost pressures may ease going forward as the Biden administration on Thursday announced the release of one million barrels of crude oil a day for six months starting in May to bring down oil prices. gasoline.
“With the Ukraine crisis lingering, it’s too early to feel any relief, but (with Biden’s announcement) I think we can say we’ve dodged the worst in terms of import growth and the trade balance,” he said. said Park.
Separately, on Friday, a private sector survey showed factory activity slowed in March as the economic fallout from the war in Ukraine added strain to businesses already grappling with supply chain disruptions and inflationary pressures.