SEOUL — South Korea on Wednesday posted a record monthly trade deficit for January due mainly to a far worse-than-expected drop in exports, drawing a pledge from government to employ all available resources to revive overseas sales.
Finance Minister Choo Kyung-ho, while blaming long holidays in China and other one-off factors for the poor export numbers, said the reopening of South Korea’s giant neighbor from long lockdowns would help improve foreign trade in the coming months.
Exports fell 16.6% in January from a year earlier, trade ministry data showed, worse than an 11.3% decline predicted in a Reuters survey and the fastest drop in exports since May 2020.
Imports fell 2.6% compared with a year earlier, less than a 3.6% drop predicted in the survey. As a result, the country posted a monthly trade deficit of $12.69 billion, setting a record amount for any month.
“The government will mobilize all available policy resources to help support a drive to boost exports so that the timing of improvement in trade balance can be advanced,” Choo said at a scheduled meeting of trade-related officials, without discussing specifics.
Economists also said Asia’s fourth-largest economy would benefit from China’s normalization of economic activity within the coming few months, while falling global energy prices would also help ease the trade deficit.
“The long holidays both here and in China likely affected the monthly performance, and China’s reopening from lockdowns and return from holidays will help, although over time,” said Park Sang-hyun, economist at HI Investment and Securities.
Factories are shut for a long period during the lunar New Year’s holidays in South Korea and China during January or February each year.
Local markets appeared to shrug off the monthly trade performance on hopes the country was near or at its worst situation in overseas sales, while a rally in U.S. stocks overnight also supported bets on risk assets.
The government has forecast this year’s exports would fall 4.5% after posting a 6.1% gain in 2022, and the trade ministry has said it would do whatever it can to avert a decline. (Reporting by Choonsik Yoo and Jihoon Lee. Editing by Gerry Doyle and Lincoln Feast.)