hankyoreh

This undated photo shows an HMM container ship (provided by HMM)

After dipping into the red for two straight months in December and January, South Korea’s trade balance returned to a surplus in February.

This was thanks to record-high exports that came despite the continued pandemic, rising raw material prices, and the deepening domestic and overseas uncertainties associated with the situation in Ukraine.

Imports were also at an all-time high for a February.

According to February export and import trend statistics shared by the South Korean Ministry of Trade, Industry and Energy (MOTIE) on Tuesday, South Korea recorded a surplus of US$840 million in its trade balance for February. Exports totaled US$53.91 billion, up by 20.6% from the same month in 2021, while imports were calculated at US$53.07 billion, a rise of 25.1%.

South Korea’s trade balance moved into the red for the first time in 20 months in December, with a deficit of US$430 million. In January, it recorded its largest-ever deficit of US$4.83 billion.

But even though imports registered an all-time high value for a February amid sharp rises in international petroleum and other energy prices, the balance of trade improved thanks to exports setting a monthly record by registering an average daily performance of US$2.696 billion.

The previous average daily high for a month was US$2.66 billion in September 2021.

Another record was set for exports as an increase of over 20% propelled them past the US$50 billion mark from the first time in a February. The previous February high was US$46.3 billion in 2012.

“The transition into a surplus this February was a meaningful result achieved at a difficult time with the worsening situation in Ukraine and changes to global supply chains, as well as an accomplishment showing the potential of South Korean manufacturing,” said South Korean Trade Minister Moon Sung-wook.

Jo Sang-hyeon, director of the Korea International Trade Association’s Institute for International Trade, said, “It appears that we’ve turned around and moved back into surplus conditions faster than originally anticipated as heating energy imports have fallen since mid-February and exports have shown a steady increase.”

“This once again shows how exports are the cornerstone of the economy,” he added.

The MOTIE said the figures showed “across-the-board increases in exports without a preponderance toward any specific items or regions, including record increases for exports of 15 major items across nine markets.”

The overall rise in exports was propelled by major increases for IT-related areas such as semiconductors (24.0%), computers (44.5%), displays (39.2%), and appliances (14.6%), along with steel (40.1%), petrochemicals (24.7%), petroleum products (66.2%), and biohealth items (24.7%).

Exports rose for all 15 major items with the exception of automotive parts, which fell by 1.1%. The decline in auto part exports was attributed to falling production at overseas plants due to supply issues related to semiconductors used in cars.

By market, exports increased for an 11th straight month across all regions. In the four major markets of the US, China, the EU, and Southeast Asia, the performance was the highest-ever for a February, and gains were also seen in emerging markets such as India and the countries of Central and South America.

The MOTIE also noted, “While uncertainties are increasing due to the worsening situation in Ukraine, exports to Russia and Ukraine continued to increase through February.”

South Korean exports to Russia rose by 22.1% in January and 48.8% in February. Exports to Ukraine climbed by 13.6% in January and 21.2% in February.

Despite the strong February performance, it is too soon to declare whether the trade surplus will continue. The situation remains highly volatile, given the current high energy prices and the ramifications of the war in Ukraine.

Trade Minister Moon said, “To ensure that we can sustain the trend of increase in exports while minimizing the impact on exports from the Ukraine situation and other external factors, we intend to implement concerted export support measures during the first half of this year, including the provision of 100 trillion won toward trade insurance.”

By Kim Young-bae, senior staff writer

Please direct questions or comments to [english@hani.co.kr]