Korea’s export earnings plummeted further this month as shipments of semiconductors, mobile phones and other mainstay export goods dropped for the third month running and import costs rose.

That brought the country’s trade deficit so far this year to US$50 billion. The last time Korea suffered a trade deficit was in the 2008 global financial crisis.

The trend is expected to continue next year amid falling exports of semiconductors and plunging demand from China, Korea’s top foreign market.

Cho Sang-hyun at the Korea International Trade Association said, “Declining demand due to rising interest rates and rising raw material prices due to the protracted war between Russia and Ukraine are compounded by falling prices of semiconductors and other key export goods.”

The Korea Customs Service said exports in the first 20 days of this month fell 8.8 percent on-year to $33.6 billion, while imports rose 1.9 percent to $40.1 billion, resulting in a $6.4 billion trade deficit.

Overall exports started declining in October for the first time in two years and dropped 14 percent last month. But exports of semiconductors had already been falling for five months and plummeted 24.3 percent in December.

Exports to China plunged 26.6 percent on-year and they also fell dramatically to six other key markets like Vietnam (20.6 percent), Japan (12.2 percent) and Hong Kong (47.5 percent).

There were hopes that when China relaxed its zero-COVID lockdowns, Korean exports there would recover, but that was not immediately evident.

Instead, Korea’s exports to the U.S. increased 16.1 percent to $5.9 billion, but that was not enough to offset the decline. Last year, Korea’s exports to the U.S. equaled only 59 percent of shipments to China, but now the U.S.’ proportion has risen to 70 percent.

In the first 20 days of December, the trade deficit grew by another $6.4 billion, bringing the total to $49 billion so far this year. Already in August it surpassed the previous record of $20.6 billion set in 1996 by reaching $25 billion.

Next year, international organizations expect the global economy to grow only between 2.2 percent and 2.7 percent, down 0.5 to 0.9 percentage points from this year. Here, KITA projects exports to fall another four percent to $662.4 billion while imports fall eight percent to $676.2 billion, which would still mean a trade deficit of $13.8 billion.