South Korea Experiences a Trade Deficit in March Due to Declining Exports and High Energy Imports

South Korea’s exports hit in March, falling 13.6% year-on-year to $551.2 billion, while imports fell 6.4% to $597.5 billion, resulting in a trade deficit of $4.6 billion.

The decline in exports can be attributed to the global economic slowdown, the deterioration in the semiconductor industry, and the base effect of last year’s record March exports ($63.8 billion).

Despite declines in semiconductor (-34.5%) and display (-41.6%) exports, the country saw growth in automotive-related exports, including automobiles (+64.2%) and secondary batteries (+1.0%).

South Korea’s most oversized export item, semiconductors, contributed significantly to declining exports due to falling product prices.

Geographically, exports to the United States (+1.6%) and the Middle East (+21.6%) continued to grow, driven by a surge in automobile exports.

However, exports to China (-33.4%) and ASEAN (-21.0%), regions with a high share of semiconductor exports, declined. Vietnam’s decline in exports and imports, primarily due to the global economic slowdown, also contributed to the decline in exports to China and ASEAN.

Energy imports, including crude oil (-6.1%) and gas (-25.0%), fell in March, leading to a decline in total imports.

The trade deficit of $4.6 billion is attributed to sluggish semiconductor exports and high energy imports, but there is a gradual improvement from January’s large deficit.

The recent decline in exports was seen in countries such as China, Japan, Taiwan, and Vietnam.

The South Korean government plans to improve energy efficiency, strengthen support for good products, and encourage Korea-Japan cooperation to expand exports to address the trade deficit.

In addition, the government aims to promote innovation in energy efficiency and create a culture of conservation by incentivizing inefficient investment appliances.