Korea’s exports, the nation’s engine of growth, have declined for two consecutive months due to a global economic slowdown and energy price spike, compounded by a nationwide strike of unionized cargo truckers. The nation’s trade balance fell into deficit for eight months, the longest streak in 25 years since the 1997 Asian Financial Crisis. The government projects that prolonging the strike would hurt exports in December. Some analysis suggests that the economic growth rate at zero percent in the third quarter may take a reverse turn in the fourth quarter.
According to the Ministry of Trade, Industry, and Energy on Thursday, Korea’s exports in November fell 15 percent year-on-year to 51.9 billion U.S. dollars, the biggest reduction in two and a half years since May 2020 (-23.7 percent) when COVID-19 was raging. The total imports grew 2.7 percent year-on-year to 58.93 billion dollars due to a spike in the prices of crude oil, gas, and coal by 27.1 percent year-on-year. As a result, the trade deficit for November was 7.1 billion dollars, having widened from October (6.7 billion dollars).
The decline in exports is attributable to a sharp reduction in exports of semiconductors, the nation’s major export, due to the global economic slowdown, by 29.8 percent year-on-year. This is the largest reduction in three years since November 2019 (-30.8 percent). Exports in 11 sectors out of 15 major export industries, including petroleum chemical (-26.5 percent) and display (-15.6 percent), have all declined.
What is worse, exports are expected to dwindle even in 2023. The Korea Chamber of Commerce expected the economic downturn to continue well into the second quarter of 2023. The Korea International Trade Association (KITA) estimated the trade balance of 2023 to be negative, down by 13.8 billion dollars. Finance Minister Choo Kyung-ho said this is a critical moment, with the continued worsening of price instability, reduction in production and exports, and economic slowdown.
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