SEOUL, South Korea (AP) — South Korea recorded its largest-ever monthly trade deficit of 127 in January as exports of computer chips and other high-tech goods fell and the cost of importing oil and gas soared, South Korea’s trade ministry said Wednesday. One hundred million U.S. dollars.
The growing shortages underscore how Russia’s war on Ukraine is weighing on the global economy, with prices for key resources such as crude oil and nickel remaining elevated after falling from peaks in 2022.
South Korea’s export-reliant economy has run into deficit for 11 consecutive months, its longest deficit since 1997, when it was at the height of the Asian financial crisis.
Exports of computer chips, South Korea’s most important product, fell nearly 45% last month from a year earlier as demand slowed and chip prices fell, according to the South Korean Ministry of Trade, Industry and Energy.
The trade data came after a report by South Korean chip giant Samsung Electronics The company said business conditions for its semiconductors and consumer electronics had “significantly” deteriorated, causing its profits to plummet nearly 70% last quarter.
Chipmaking is highly cyclical, and the tech industry has gone from a severe shortage of many computer chips to an oversupply, a situation seen in many industries, including auto manufacturing.
Chip prices fell sharply on weak demand as customers adjusted inventories amid “increased uncertainty” in the global economy, Samsung said, a problem it said could persist into the current quarter.
On Wednesday, South Korea’s other major chipmaker, SK Hynix, reported an operating loss of 1.7 trillion won ($1.4 billion) for the October-December period, its first quarterly deficit since 2012.
“As uncertainties remain, we will continue to reduce investments and costs, while minimizing the impact of the economic downturn by prioritizing markets with high growth potential,” 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 country’s exports fell nearly 17 percent in January from a year earlier, with modest gains in sales of cars, petroleum products and ships failing to offset a larger drop in semiconductor shipments, the trade ministry said.
The country, which imports most of its energy supply, spent nearly $16 billion last month on fuel, natural gas and coal. That was significantly higher than the country’s average of $10 billion in January imports of these goods over the past 10 years, said Moon Dong-min, a senior trade official.
“The global economy remains subdued due to austerity in major economies and Russia’s protracted war in Ukraine,” Moon said in a briefing.
The war has taken a similar toll on other economies reliant on industrial exports, such as China, Japan and Germany, as countries grapple with rising prices and slower growth, he said.
The global semiconductor market is likely to remain sluggish for the next few months before recovering in the second half of the year after existing inventories are depleted, Moon said.
“If semiconductor exports recover, that will help our (country’s) export recovery tremendously,” Moon said.