SEOUL, South Korea (AP) — South Korea logged its greatest month-to-month commerce deficit ever, at $12.7 billion in January, as exports of pc chips and different high-tech objects sank and prices for importing oil and gasoline surged, the commerce ministry stated Wednesday.
The rising shortfall underscored how Russia’s struggle on Ukraine is straining the worldwide economic system, maintaining costs for key assets like crude oil and nickel excessive even after they fell again from spikes in 2022.
South Korea’s export-dependent economic system has logged a deficit for 11 consecutive months, the longest streak since 1997 when it was on the cusp of the Asian monetary disaster.
Exports of pc chips, South Korea’s most necessary product, declined by almost 45% final month from a yr earlier due to slowing demand and falling chip costs, in line with South Korea’s Ministry of Commerce, Business and Power.
The commerce information was launched after South Korean chip large Samsung Electronics reported that its revenue for the final quarter plunged by almost 70% in what it described as a “considerably” deteriorated enterprise atmosphere for its semiconductors and shopper electronics merchandise.
Chip making is very cyclical, and tech industries have swung from stark shortages for a lot of pc chips, felt throughout many industries together with automaking, to a glut.
Samsung stated chip costs fell sharply amid weakened demand as shoppers adjusted their inventories in face of “deepening uncertainties” within the international economic system, an issue the corporate says will probably lengthen by this quarter.
On Wednesday, SK Hynix, one other main South Korean chipmaker, reported an working lack of 1.7 trillion gained ($1.4 billion) for the October-December interval, which marked its first quarterly deficit since 2012.
“With uncertainties nonetheless lingering, we are going to proceed to cut back investments and prices, whereas attempting to attenuate the influence of the downturn by prioritizing markets with excessive progress potential,” the corporate stated in a press release.
SK Hynix introduced plans in October to cut back its investments in 2023 by greater than a half in comparison with the 19 trillion gained ($15 billion) it spent in 2022.
The commerce ministry stated the nation’s exports throughout January declined by almost 17% from a yr earlier, with the modest enhance within the gross sales of vehicles, petroleum merchandise and ships failing to offset the bigger drop in semiconductor shipments.
The nation, which is determined by imports to offer most of its power provides, spent almost $16 billion buying gasoline, gasoline and coal final month. This was significantly increased than the common of $10 billion the nation spent to import these objects throughout the Januarys of the earlier 10 years, senior commerce official Moon Dong-min stated.
“The worldwide economic system stays sluggish, because of the contractionary insurance policies of main economies and the prolonging of Russia’s struggle on Ukraine,” Moon stated in a briefing.
He stated the struggle, which has left international locations grappling with increased costs and slower progress, has taken an identical toll on different economies depending on industrial exports, together with China, Japan and Germany.
Moon stated the worldwide semiconductor market will probably stay sluggish over the following few months earlier than recovering within the later half of the yr following the depletion of present inventories.
“If the exports of semiconductors recuperate, that may be an enormous assist in letting our (nation’s) exports recuperate,” Moon stated.