Trade Surplus Breaks Monthly Record

The country’s trade surplus hit a record high 4.61 billion U.S. dollars in March due to a plunge in imports thanks to the weak won and falling oil prices, the Knowledge Economy Ministry said yesterday.

The ministry also said in a report that the trade surplus is highly likely to break another record this month, and that the trade balance will remain in the black for a while.

Exports dropped 21.2 percent from a year ago to 28.37 billion dollars while imports plunged 36 percent to 23.76 billion dollars. As a result, the ensuing trade surplus last month shattered the previous record of 3.85 billion dollars in April 1998.

For the first three months this year, the cumulative trade surplus was 3.93 billion dollars.

The drop in imports last month was second only to that of October 1998 (39.3 percent). Raw materials, which usually account for 60 percent of imports, saw imports decrease 46.9 percent from a year ago.

Imports of capital goods fell 31 percent and those of consumer goods declined 30.8 percent from a year ago.

The weak won also played a pivotal role in the import plunge. The ministry said, “Changes in foreign exchange rates are reflected in import and export trends three months later. The won has weakened from October last year and the foreign exchange rate effect has appeared since February.”

The monthly average of the won-dollar rate jumped last year from 1,000.2 in March to 1,306 in October. Since then, the rate has stayed in the range of 1,400 and 1,500.

Lee Dong-geun, head of the ministry’s Office of International Trade and Investment, said, “Since Korea’s exports were exceptionally robust last year, exports will inevitably drop around 20 percent until September. But if the won stays weak and oil prices keep falling, export performance will improve and the trade surplus will keep growing.”

In London, President Lee Myung-bak told CNBC in an interview, “Korea’s exports have been relatively stable in January, February and March, and I expect the trade surplus will reach 15 billion to 20 billion dollars by year’s end.”

“Korea’s financial sector is relatively stable since financial supervisory functions have been unified and supervision of financial soundness has been strengthened.”

lovesong@donga.com