South Korea’s trade deficit rose to a record in January due to rising fuel prices, as imports continued to soar while export growth moderated slightly.
The deficit reached $4.9 billion, its highest ever level, as markets shook off economic uncertainty caused by the Omicron coronavirus variant.
Exports rose 15.2%, compared with economists’ forecasts of a rise of 15.5%, while imports rose 35.5% on the same period a year ago, compared to consensus expectations of 32.8%.
The jump in imports was notable, and pushed the trade balance into a deficit for the second month in a row.
The Ministry of Trade, Industry and Energy said that the rise in imports and the growth in the trade deficit were largely the result of increased energy prices, which occurred during winter, when demand for fuel is greater.
The country’s exports have benefited from the pandemic in recent years as remote working and lockdowns fuelled demand for high-tech products.
January’s growth came in at its slowest rate in almost a year, however, suggesting that the country’s export boom may be beginning to taper.
“We see such a trend to persist at least in the first quarter of 2022, and see the current account surplus to narrow to $69.5 billion in 2022, from $88 billion in 2021,” Angela Hsieh, equity analyst at Barclays Bank in Singapore, said.
- George Russell
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