Deepening deficit highlights Seoul’s trade challenges
Friday, February 3, 2023
Significance
However, it also experienced its first trade deficit since 2008 (and its largest ever), as energy import costs soared. January’s deficit set a new monthly record, with exports plunging 16.6% year-on-year. The quest for new growth sectors has as yet borne little fruit. Exports remain dominated by familiar stalwarts: above all electronics, but also vehicles, steel and ships.
Impacts
- Cultural exports may help Seoul project soft power, but they contribute little to the overall economy.
- While avoiding abrupt moves or overt confrontation, South Korea will seek to reduce its commercial dependence on China; that will take time.
- Semiconductors, the largest export item, are in a downswing, but car exports will drive steadily forward.