Why it matters: South Korea's exports have plummeted, falling more than 16% year-over-year in the first 20 days of this month. This has resulted in a more than $4.3 billion trade deficit, with forecasts pointing to a negative trade balance for the 15th consecutive month.
- From May 1 to May 20, South Korea's exports totaled $32.43 billion, down 16.1% year-on-year. The average daily export value decreased by 13.2% to $2.24 billion. This is the eighth consecutive month of decline.
- Despite a 54.7% increase in the export of passenger cars, the country saw a sharp decline in the export of critical products such as semiconductors, which plunged 35.5% year-on-year. There were also declines in exports of petroleum products, wireless communication equipment, and precision instruments.
- Exports to most regions, including China, South Korea's largest trading partner, fell significantly. Meanwhile, imports in the same period amounted to $36.47 billion, down 15.3% year-on-year.
- With imports outpacing exports, South Korea's trade balance for the first 20 days of May resulted in a deficit of $4.34 billion.
The Big Picture: South Korea's export decline represents a significant shift in the country's economic landscape. The decline in critical exports, such as semiconductors, continues, pointing to more considerable structural changes in the global trade ecosystem. This trend underscores the vital need for South Korea to diversify its export base and seek new growth engines to rebalance its trade.