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South Korea’s exports continued to fall in March, which marked the sixth consecutive month of decline since October 2022. The slumps in semiconductor exports, the country's largest export item, and exports to China have failed to rebound, leaving the trade balance in the red for 13 consecutive months.

March import and export trends released by the Ministry of Trade, Industry and Energy (MOTIE) on Saturday show that exports fell 13.6% to US$55.13 billion compared to the same month in 2022, while imports fell 6.4% to US$59.75 billion over the same period.

The ministry attributed the decline in exports to a slump in the semiconductor industry, the country’s flagship product, amid a global economic slowdown. The base effect that exports hit a record high (US$63.8 billion) in March 2022 is also thought to be an influence.

This is the first time since the early stages of the COVID-19 pandemic (March-August 2020) that exports have fallen for six consecutive months. However, the value of exports did return to the US$55 billion mark for the first time in six months, the last time having been in September 2022 (US$57.2 billion). Imports fell 6.4% from March 2022 due to lower energy prices.

Broken down by product type, exports of automobile-related items such as automobiles (64.2%) and secondary batteries (1.0%) increased for the fourth consecutive month. However, exports of information technology items such as semiconductors (-34.5%), displays (-41.6%), and intermediate goods such as petrochemicals (-25.1%) and steel (-10.7%) decreased. The slump in semiconductor exports is particularly lagging.

Semiconductor exports have continued to decline sharply on a year-on-year basis, decreasing 44.5% in January and 42.5% in February. Exports to China (-33.4%) and ASEAN (-21.0%), which account for a large proportion of semiconductor exports, also fell sharply. MOTIE analyzed that a “decline in exports has been seen recently in a variety of countries, including South Korea, China, and Japan, as well as in Taiwan and Vietnam.”

The problem is that falling semiconductor prices are unlikely to rebound in the short term. The government also believes that the semiconductor industry is “unlikely to make a rapid recovery.”

The government expects the earliest period in which demand to outstrip supply will be in the third quarter of 2023. According to data from MOTIE, among semiconductor products, the fixed price of DRAM dropped from US$3.41 per unit in January-April 2022 to US$1.81 in the first three months of 2023. The fixed price of NAND flash fell from US$4.81 from January-May 2022 to US$4.14 from October 2022 to February 2023, and fell below US$4 in March to US$3.93.

Korea’s trade deficit reached US$4.92 billion, marking the 13th month of deficit since March 2022. This is the longest streak of trade deficits since the one that lasted from January 1995 through May 1997. However, the government said that the trade deficit improved slightly from January (-US$12.7 billion) and February (-US$5.3 billion) this year due to the decline in the unit cost of energy imports.

By Kim Hoe-seung, senior staff writer

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