SEOUL, South Korea (AP) — South Korea posted a monthly trade deficit of $12.7 billion in January. Exports of computer chips and other high-tech goods and the cost of importing oil and gas are rising, the Commerce Ministry reported on Wednesday. .
The growing deficit As Russia’s war on Ukraine in 2022 continues to wreak havoc on the global economy, the prices of key resources such as crude oil and nickel will remain high even after falling in 2022.
South Korea’s export-dependent economy has run deficits for 11 consecutive months, this year. It is the longest since the 1997 Asian financial crisis.
South Korea’s most important export of computer chips fell nearly 45% last month from a year earlier, as demand slowed and chip prices fell, South Korea’s Ministry of Trade, Industry and Energy said.
The business data was released after South Korean chip giant Samsung Electronics posted a 70% drop in profit in the latest quarter, citing a “significantly” worsening business environment for semiconductors and consumer electronics products.
Chipmaking is highly cyclical, and the technology industry has gone from a severe shortage to a glut for many computer chips in many industries, including automotive.
Samsung chip prices fell sharply on weak demand as customers adjust to “deep uncertainties” in the global economy, which the company said could extend into this quarter.
On Wednesday, SK Hynix, another major South Korean chip maker, reported a loss of 1.7 trillion won ($1.4 billion), its first quarterly loss since 2012.
“As the uncertainty remains, we will continue to reduce investments and costs, prioritizing markets with high growth potential, trying to reduce the impact of the recession,” the company said in a statement.
SK Hynix announced in October that it plans to more than halve its investment in 2023 from 19 trillion won ($15 billion) in 2022.
The Commerce Ministry said in January that the country’s exports fell 17% from a year earlier, as modest increases in sales of cars, petroleum products and ships failed to offset a large drop in semiconductor shipments.
The country, which relies on imports for most of its energy supply, spent nearly $16 billion on oil, gas and coal purchases last month. This was more than the $10 billion average the country spent on importing these goods in January over the past 10 years, said trade official Moon Dong Min.
“The global economy is sluggish due to contractionary policy in major economic policies and Russia’s prolongation of its war on Ukraine,” Moon said in a briefing.
He said the war, which left countries with high prices and slow growth, caused similar damage to other economies dependent on industrial exports, including China, Japan and Germany.
Moon said the global semiconductor market will remain sluggish for the next few months, before recovering in the middle of the year following the depletion of existing supplies.
“If semiconductor exports recover, that will be a big help in helping our (the country’s) exports recover,” Moon said.