South Korea has been running a trade deficit since March last year as prices of imported goods have soared. February was no exception, ending with a deficit of $5.3 billion, imports up 3.6%. At the same time, exports fell by 15.9% yoy if only counting the working days, which were more in February than in January. Exports of semiconductor components fell by 43% in monetary terms.
In fact, in February this year, South Korea experienced its biggest fall in export earnings since June 2020, according to official statistics cited by Bloomberg. The main contributor to the country’s export earnings is shipments of semiconductor components, mainly memory chips, and low prices for this type of product caused core earnings to fall by 43% in February compared to the same month last year. At the same time, revenue from auto exports rose by 47%, which may indirectly indicate a partial resolution of the component shortage that hampered vehicle production last year. This partially allowed Korea to reduce its trade deficit, which hit record highs in January.
Exports to China fell by 24% and the PRC is South Korea’s largest foreign trade partner. The reduced range of chips for smartphones and construction machinery played the main role here. The country shipped 4.9% less goods to Japan, mainly due to petrochemical industry products.