© Reuters Global Economic Cooling Alert! South Korea’s first trade deficit since the 2008 financial crisis
Financial Associated Press News January 2 (Edited by Zhou Ziyi)Signs of cooling global demand are becoming increasingly apparent. Exports from South Korea, known as the “global economic canary,” continued to decline in December.
Exports in December fell 9.5% from a year earlier, economists had expected -11.1%, the previous value was -14% and imports fell, according to data released by the South Korean Ministry of Commerce on Sunday. by 2.4% on an annual basis. year.
In 2022, South Korea’s exports will increase by 6.1%, imports will increase by 18.9%, and the annual trade deficit will be $47.2 billion, a record high.It was the first annual deficit since the global financial crisis. The trade deficit was $4.7 billion in December.
South Korea’s exports have long been seen as an important barometer of global demand for business and technology, as South Korea is a major exporter of chips, displays and refined petroleum.
South Korea’s economic risk increases
Continued interest rate hikes by the Bank of Korea are a contributing factor to the weakening economy. Over the past year, the Bank of Korea has followed the Federal Reserve’s pace to raise interest rates and tighten policy. For the Bank of Korea, trade resilience has been a key source of assurance that the economy can bear higher borrowing costs.
But now, with the global economic slowdown and soaring oil prices hitting many trade-dependent countries, the Bank of Korea’s rate-hiking cycle may be coming to an end.
The contraction in South Korea’s monthly shipments began in October last year, mainly due to weakening chip demand.
Semiconductor sales fell 29.1 percent in December from a year earlier, the fifth consecutive monthly drop, according to data from the Commerce Ministry. In addition, semiconductor makers are adjusting to slower demand, with South Korean chip production declining for the fourth consecutive month, with the biggest cut in November since 2009.
Labor disputes in South Korea are another factor that could hit the economy. The price hike has sparked dissatisfaction among workers and a nationwide strike by truck drivers has put pressure on supply chains in South Korea that lasted half a month until early last month.
Several factors complicate the trade outlook, including high global inflation, China’s epidemic prevention and control entering a new phase, and uncertainty over the course of the Russia-Ukraine conflict. South Korea’s finance ministry forecasts that exports could fall by 4.5% in 2023, while imports could fall by 6.4%.
