The value of Korean exports in January has decreased for the 14th straight month, with the Asian nation posting an export figure of US$43.35 billion, a 6.1% fall from the previous year.
One reason for the continued decrease was due to the reduction in working days in January compared to a month earlier, resulting in a loss of output across the nation. The other reason can be attributed to weak global demand for one of Korea’s major exports: the microchip.
Despite the reduction in exports, the Korean trade surplus is still extremely healthy; valued at over US$620 million for January. This is mainly due to Korea’s role as not only the global leader in the production of microchips, but also in smartphones, cars, and ships, all of which have maintained healthy demand in overseas markets.
The other concern for the Korean economy is the impact the outbreak of the coronavirus might have on demand for exported goods. China is by far Korea’s largest trading partner, and if the virus continues to spread it could have severe economic consequences not only on China, but on the global economy as a whole.
Q1. What is meant by the term trade surplus?
Q2. Describe what has happened to Korea’s trade surplus in the last five months.
Q3. Analyse the benefits of having a trade surplus to a country like Korea.
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