S. KOREA POSTS LARGEST TRADE DEFICIT

[Anchor Lead]

Korea posted a trade deficit last month as well. It's the first time in 14 years that a trade deficit was recorded for the fifth month in a row. It was also the largest deficit ever. Exports of electronic chips declined for the first time in two years. Trade with China was also in the red.

[Pkg]

In the month of August, Korea posted a trade deficit of 9.47 billion dollars the largest on record. For the first time in 14 years, Korea has posted trade deficits for five consecutive months. The amount of imports recorded an all-time high in August on the soaring energy prices and high demand for electricity caused by the hot weather. Imports of intermediate materials like semiconductors and secondary batteries also surged. A red flag was also raised in exports, which had been going strong until recently. Exports of electronic chips, which account for 20 percent of Korea's overall exports, declined for the first time in two years. Demand has shrunk while inventories are piling up as the economy slows down. As a result, the price of memory chips have been plunging continuously this year.

[Soundbite] Moon Dong-min(Ministry of Trade, Industry and Energy) : "It's going to be difficult to find momentum to boost semiconductor prices for the time being. The trend will likely continue through the end of the year."

The decline in chip exports has led to a decrease in overall exports to China. For the first time since the establishment of bilateral relations between the two countries, trade with China has been in the red for four straight months. The export growth rate, which had remained steadily in double digits for some time, has also plummeted to single digits. The median daily export amount has fallen to the lowest level of the year.

[Soundbite] Joo Won(Hyundai Economic Research Institute) : "Int’l trade is declining lately. S. Korea's exports will likely fall into severe stagnation in the second half of 2022 and the first half of 2023."

The trade deficit will likely remain throughout the year as there is little the government can do to improve the situation other than devising measures to prop exports.