Korea: Merchandise exports lose momentum in December, leading to the first trade deficit since April 2020
Merchandise exports rose 18.3% annually in December (November: +32.0% year-on-year). Export growth benefitted from buoyant demand abroad for electronics. That said, sequential momentum for other non-chip tech products, petrochemicals and ships deteriorated. Meanwhile, merchandise imports jumped 37.1% in annual terms in December (November: +43.6% yoy).
As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 0.6 billion shortfall in December (November 2021: USD 3.1 billion surplus; December 2020: USD 6.7 billion surplus), the first monthly deficit since April 2020. Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 29.5 billion surplus in December, compared to the USD 36.8 billion surplus in November.
Commenting on the outlook, analysts at EIU said:
“Merchandise exports will continue to grow in 2022, underpinned mainly by high levels of consumer demand in major economies. South Korean electronics and healthcare products will remain in high demand, and the semiconductor shortage that constrained the production and export of vehicles will have eased by late 2022. Semiconductors—particularly memory chips—will maintain robust growth amid a global drive of data-centre construction. However, the external sector will remain vulnerable in the medium term to increasing competition from regional neighbors, including China, especially in the electronics and automotive industries.”