South Korea on course for seventh month of trade deficit

South Korea is poised to post a trade deficit for the seventh straight month in October, which would mark the longest period of shortfalls in 25 years, on sluggish semiconductor exports, adding to concerns over growth in Asia’s fourth-largest economy.

The country logged a trade shortfall of $5 billion in the first 20 days of October with overall exports down 5.5% from the same period a year earlier to $32.4 billion, preliminary data from the Korea Customs Service showed on Friday. On the other hand, imports grew 1.9% to $37.4 billion.

The deficit boosted its total shortfall so far this year to $33.8 billion, surpassing an annual record of $20.6 billion posted in 1996.

If the country posts a trade deficit for the whole month of October, it will be its longest spell of trade shortfalls since the January 1995-May 1997 period.

SEMICONDUCTORS, CHINA

Semiconductor exports in the Oct. 1-20 period slumped 12.8% on weakening demand amid excessive inventory. South Korea is home to the world's two largest memory chipmakers -- Samsung Electronics Co. and SK Hynix Inc.

Overseas sales of wireless communication devices and ships declined 15.6% and 22.9%, respectively, although sales of passenger cars and petroleum products rose 32.1% and 16.4%.

The country’s trade balance is expected to remain in the red as the global chip industry is unlikely to rebound anytime soon and the Chinese economy, South Korea’s top overseas market, remained sluggish, analysts said.

Exports to China fell 16.3% in the first 20 days of October, resulting in a trade deficit of $1.2 billion against the country.

The recent falls in oil prices helped South Korea reduce the overall trade deficit, but global major crude producers’ decision to cut output from November, as well as higher liquefied natural gas (LNG) prices during the winter, are likely to balloon the shortfall again.

Write to Byung-Uk Do at dodo@hankyung.com
Jongwoo Cheon edited this article.