SEOUL, South Korea (AP) — South Korea posted its largest month-to-month commerce deficit on document at $12.7 billion in January as exports of pc chips and different high-tech objects s – have diminished and the prices for the import of oil and fuel have elevated, the Ministry of Commerce stated on Wednesday.
The widening deficit underscored how Russia’s battle in opposition to Ukraine is straining the worldwide financial system, conserving costs of key sources equivalent to crude oil and nickel excessive even after they retreat from peaks in 2022.
South Korea’s export-dependent financial system has run a deficit for 11 consecutive months, its longest streak since 1997, when it was on the point of the Asian monetary disaster.
Exports of pc chips, South Korea’s prime product, fell practically 45 p.c final month from a 12 months earlier because of slowing demand and falling chip costs, in accordance with South Korea’s Ministry of Commerce, Business and Vitality .
The buying and selling information was launched after South Korean chip big Samsung Electronics reported that its revenue for the most recent quarter fell practically 70% in what it described as a “considerably” deteriorating enterprise surroundings for its semiconductor and client electronics merchandise.
Chip manufacturing is extremely cyclical, and expertise industries have gone from extreme shortages for a lot of pc chips, felt in lots of industries, together with auto manufacturing, to oversupply.
Samsung stated chip costs fell sharply amid falling demand as prospects adjusted their inventories within the face of “deepening uncertainties” within the world financial system, an issue the corporate stated was more likely to widen this quarter.
On Wednesday, SK Hynix, one other main South Korean chipmaker, reported an working lack of 1.7 trillion received ($1.four billion) for the October-December interval, marking its first quarterly loss since 2012 .
“With uncertainties persisting, we are going to proceed to scale back investments and prices whereas attempting to reduce the influence of the recession by prioritizing markets with excessive development potential,” the corporate stated in an announcement.
SK Hynix introduced plans in October to chop its capital spending in 2023 by greater than half from the 19 trillion received ($15 billion) it spent in 2022.
The Commerce Ministry stated the nation’s exports in January fell practically 17 p.c from a 12 months earlier, with modest will increase in gross sales of vehicles, petroleum merchandise and ships failing to offset bigger declines in semiconductor shipments.
The nation, which is dependent upon imports for many of its power provide, spent practically $16 billion final month shopping for gasoline, fuel and coal. That was significantly larger than the $10 billion common the nation spent importing this stuff within the January months of the previous 10 years, stated Moon Dong-min, a senior commerce official.
“The worldwide financial system stays sluggish as a result of contractionary insurance policies of main economies and the prolongation of Russia’s battle in opposition to Ukraine,” Moon stated in a briefing.
He stated the battle, which left nations grappling with larger costs and slower development, had taken an analogous toll on different economies depending on industrial exports, together with China, Japan and Germany.
Moon stated the worldwide semiconductor market is more likely to stay sluggish for the subsequent few months earlier than recovering within the second half of the 12 months as present shares run out.
“If semiconductor exports recuperate, it will be very useful to allow our (the nation’s) exports to recuperate,” Moon stated.