SEOUL- South Korea’s trade deficit is expected to continue for the time being due to the global slowdown and high oil prices, the central bank said in a research paper released on Tuesday.
Nearly 80 percent of the total decrease in the trade balance so far this year has resulted from a surge in oil prices, it added.
South Korea’s trade balance logged a cumulative $24.7 billion deficit from January to August, down $45.4 billion from the same period a year earlier, while a decrease of $35.3 billion, or 78 percent, was affected by increased prices of energy and petroleum products, according to the Bank of Korea’s analysis.
Global oil prices hit their highest in more than a decade last March as the Russia-Ukraine war led to disruptions in energy supplies, before paring some gains to recent levels around $90 per barrel.
“The trade balance is expected to continue its trend in the red for the time being, as the impact from global economic slowdown comes into full effect, while global oil prices remain at their high levels,” the BOK said.
The central bank estimated a fall of $10 in global oil prices on an annual average basis would improve the trade balance by $9 billion.
South Korea’s trade balance is expected to record an annual $29 billion deficit this year, the biggest on record, before swinging to a slight $1 billion surplus next year, according to the central bank’s economic forecast last month.
