KOREA ran a trade deficit of $ 10, 000 million in 1995 and recorded a deficit of more than $9, 000 million in the first six months of this year. ‘The dleficit is a characteristic feature of the Korean economy but the scale of the imbalance this year was completely unexpected.
As recently as early July officials were predicting, at worst, a deficit of $12,000 million over the whole year. This already looks optimistic although analysts are not unduly perturbed as the figures reflect rising demand for plant and equipment. The current account decifit was $8,800 million in 1995.
The collapse of semiconductor prices has hurt the export performance in a dramatic fashion. In 1995, there was a world shortage of the tiny computer chips and Korean exports soared to nearly $20,000 million This year there is a glut and prices have tumbled. In 1995, semiconductors at accounted for 16 per cent of total exports sales. By comparison, sales of textiles and fabrics, which are Korea’s second biggest export item, were worth only $9,100 million On the import side, crude oil is the second most costly item after machinery, while oil products rank sixth. As the largest single source of oil Saudi Arabia ranks fifth among Korea’s overseas suppliers after Japan, the US, China and Germany.