A view of the Ministry of Trade, Industry and Energy at Government Complex Sejong (The Korea Herald)
SEJONG -- South Korea’s trade-related officials are striving to overcome the worsening trade balance in the wake of declining exports to major destinations, including China and Russia, from a variety of incidents.
Trade Minister Yeo Han-koo on Monday presided over a meeting to map out countermeasures against external negative factors which involve China’s possible lockdown of more major cities aside from Shanghai against variants of COVID-19 and the war between Ukraine and Russia.
Korea’s outbound shipments to China fell by 3.4 percent on-year in April in the wake of the lockdown in Shanghai, one of China’s largest logistics hubs, according to participants in the meeting and the Ministry of Trade, Industry and Energy.
Participants raised the possibility that the Chinese government-led restriction of people’s movements would spread to Beijing and other major cities, after the nation’s Labor Day holidays in early May.
Russia’s invasion of Ukraine has also brought a decline of more than 70 percent in Korea’s exports to Russia.
During the first 25 days of April, a 97.3 percent on-year fall was reported in exports of automobiles, 87.4 percent in auto parts and 89.2 percent in steel, said the ministry. The figures come after the economic sanctions against Moscow by the international community, including Seoul.
A longer-than-expected Ukraine war could have negative impacts on the nine-country Commonwealth of Independent States -- Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Uzbekistan -- whose economies are quite dependent upon that of Russia.
Participants predicted that an unfavorable ripple effect among these countries might deal a blow to Korea in terms of exports and imports.
In addition, Indonesia’s suspension in palm oil exports could trigger a critical glitch in the supply of palm oil globally, which is used for production of many cosmetics, detergents and Korean instant food products.
This may possibly cause higher import prices of palm oil and alternatives like sunflower oil in the nation, with hurdles emerging in satisfying global demands for Korean cosmetics products and others.
Korea is also suffering difficulty in trades with Myanmar, whose government suspended settlement via foreign currencies, said meeting participants. The situation may bring about a plunge in exports to Myanmar and a glitch in import of raw materials from the Southeast Asian nation.
During the period from January-April, Korea posted a cumulative trade deficit of $6.6 billion amid rising import prices and export glitches in some destinations.
There is a high possibility that expanding uncertainty would have negative effects on Korea, whose economy is highly dependent upon exports, said Minister Yeo.
“(The government) will provide export-oriented firms with liquidity and marketing support, in coordination with relevant ministries and export-promotion agencies,” he said.
Some critics, mentioning the recent ongoing trade deficit, say the government had been lukewarm in taking measures in a prompt manner.
By Kim Yon-se (email@example.com)