Korea Likely to Reach $1.9
Bln in Trade Deficit for 2008

Minister of Knowledge and Economy Lee presides over a trade-related meeting

Korea is forecast to chalk up approximately $1.9 billion in trade deficit for the whole of 2008 as such woes as crude oil price hikes, surging raw materials prices and sagging advanced economies have been deepening.
The Ministry of Knowledge and Economy said in a news release dated July 2 that the nation is predicted to register $435.5 billion worth of exports, a year-on-year 17.2 percent increase, and $437.4 billion worth of imports, a year-on-year 22.6 percent surge, for a $1.9 billion trade deficit during the whole of 2008.
The projection is based on a forecast that Korea will likely export $221.5 billion in the second half of 2008, a year-on-year 14.3 percent climb, and import $217.6 billion, a year-on-year 16.6 percent, for a $3.82 billion trade deficit in the second half. Earlier, the ministry announced that Korea exported goods worth $214.08 billion in the first six months of this year, up 20.5 percent over the same period of last year and exported $219.79 billion, up 29.1 percent over a year earlier to register a $5.71 billion trade deficit for the first half of the year.
Despite crude oil price hikes and downturns in the U.S. and European markets, the exporting sector recorded a double-digit growth rate for the sixth straight year, riding on a boost in such mainstay items as petroleum products and an increase in exports to such emerging markets as Africa.
Taking a look at export items, Korea saw petroleum exports surging 84.3 percent in the first half of this year over the same period of last year; liquid crystal devices climbing 34.5 percent; general machineries soaring 34.4 percent; wireless telecommunication devices increasing 29.8 percent and automotive parts rising 24.8 percent. On the other hand, computer and semiconductor exports declined 4.1 percent and 7.0 percent, respectively, due to a drop in demand and prices.
By area, exports to emerging markets soared -- a 51.2 percent surge in Africa, a 39.6 percent jump in India and a 25.8 percent rise in Latin America. Exports to the Middle East, the ASEAN (Association of Southeast Asian Nations) countries and China also jumped 37.1 percent, 36.1 percent and 27.2 percent, respectively. But exports to the United States showed signs of declining with a paltry 1.2 percent increase.
Among the imports, crude oil, petroleum and gas products shot up a surprising 42.7 percent. In particular, the value of crude imports surged 60.9 percent over a year earlier to $43.42 billion, and the unit price of crude oil imports set a record high of $100 per barrel.
Capital goods imports climbed sharply. Wireless telecommunication parts, liquid crystal devices and portable computers shot up 68.8 percent, 40.0 percent and 25.5 percent, each, while equipment for manufacturing semiconductors and air volume dampers decreased 23.1 percent and 10.1 percent, respectively.
Among consumer goods imports, agricultural produce, automobiles, clothes and shoes rose 41.6 percent, 28.7 percent, 7.9 percent and 138 percent, respectively.
Minister of Knowledge and Economy Lee Youn-ho presided over a session designed to scrutinize trade projections for the second half of 2008 with representative of such export companies as Samsung Electronics, Doosan Heavy Industries & Construction and REINCOM at the Korea International Trade Association on July 2.
The participants discussed difficulties facing exporters of each industry due to such recent woes as crude oil price hikes, soaring raw materials prices, a recession of advanced economies as well as trade predictions for the second half of 2008 and steps designed to cut down on logistics costs.
Early this year, the government announced Korea would be projected to export $415 billion, up 11.7 percent, and import $402 billion, up 12.7 percent, to register an estimated $13 billion trade surplus.
Despite such unfavorable conditions as crude oil price hikes and a recession of advanced economies, it revised upward the yearly export projection by $20.5 billion thanks to a rise of such mainstay exports as shipbuilding, wireless telecommunication gadgets and general machineries and exports to developing countries. On the other hand, the government also revised upward by $35.4 billion the yearly import projection by factoring in soaring crude and raw materials price hikes.
KITA suggested steps to improve export and import logistics procedures in the future in conjunction with a recent general strike by a union of truck owners/operators.
Participants shared the view that it is essential to stabilize the demand and supply of raw materials and they urged the government to take steps to stabilize them and foreign exchanges as well as to proactively relax restrictions.
Minister Lee expressed his intention to provide support for managing foreign exchange risks facing SMEs.
He said the government will consider delisting from the strategic export control list such export items whose diversion to weapons of mass destruction are considered to be low. nw

Minister of Knowledge and Economy Lee Youn-ho speaks at a meeting with industry representatives on ways of boosting exports.