S.KOREA POSTS ANOTHER TRADE DEFICIT

[Anchor Lead]

Korea posted a trade deficit for the second consecutive month in April. If coupled with fiscal deficit, there are fears the so-called "double deficit" could become a reality.

[Pkg]

In April, Korea posted record exports for the month. Exports of semiconductors surpassed 10 billion dollars despite the war in Ukraine and the lockdowns of major Chinese cities. However, the amount of imports grew even faster on the surging prices of raw materials, resulting in a trade deficit for the second straight month. This year Korea has posted a trade deficit every month, except for February. The government is working on measures to avert a crisis.

[Soundbite] Yeo Han-koo(Ministry of Trade, Industry and Energy) : "We will closely monitor the situation with imports and exports, as well as manage external risks and provide support to promote export growth."

Chances are high that the current account surplus will shrink further because of the continuous trade deficit. Up until February this year, Korea recorded a current account surplus of 8.2 billion dollars. But its amount decreased significantly from the same period last year. To make matters worse, the fiscal deficit is expected to surpass 70 trillion won this year. If the current account deficit is coupled with fiscal deficit, it could result in the so-called "double deficit." It would be the first double deficit since the 1997 Asian financial crisis.

[Soundbite] Joo Won(Hyundai Research Institute) : "Double deficit affects a country's credibility. Signals of dwindling foreign currency reserves can jolt the foreign exchange market."

With concerns over a global economic recession, measures are needed to prepare for a high inflation rate but low economic growth, otherwise known as "stagflation."