South Korea's trade surplus shrank sharply in August from the previous month as record high imports overshadowed export gains, the government said Thursday.
The country's trade surplus fell to US$821 million last month from $6.31 billion tallied in July, according to the Ministry of Knowledge Economy. Exports rose a solid 27.1 percent on-year to $46.38 billion, but imports soared 29.2 percent to a monthly record of $45.56 billion.
Despite the drop in the surplus, August marks the 19th straight month that the country's trade balance has been in the black.
"The rise in imports was caused by the spike in global prices of crude oil, natural gas and other raw materials that the country must buy from abroad to fuel its economy," the ministry said.
Imports of crude oil and natural gas rose 45.6 percent and 33.5 percent each, with local demand for foreign pork skyrocketing 92.1 percent on-year.
Local demand for capital goods, such as aircraft and airplane parts, also went up sharply and cut into the trade surplus.
In addition, seasonal factors played a role in reducing the country's trade surplus, said the ministry in charge of the country's industrial and trade promotion policies.
"Because many workers take time off for summer vacation, the size of the country's trade surplus usually falls off in August compared to the previous month," said An Byung-hwa, head of the ministry's export-import division.
Global economic uncertainties have affected overseas demand for some locally made goods, but imports have on the whole increased across the board, he added.
"South Korean shipyards and automakers all moved to export as many of their products as they could in July, ahead of the summer vacation period that hurt exports last month," the official said.
But An also claimed that South Korea's exports did relatively well last month, despite the downgrading of the U.S. credit rating, fluctuations in the exchange rate and economic slowdown in the European Union.
Outbound shipment of refined petroleum and steel products rose 84.5 percent and 30.9 percent each from a year earlier, with exports of ships and autos rising 77.5 percent and 32.5 percent.
Export growth for mobile communications equipment moved up just 7.1 percent on-year last month, while semiconductor and liquid crystal display shipments contracted 14.1 percent to 21.5 percent.
The latest report showed shipments to developing countries, such as the 10 member nations of the Association of Southeast Asian Nations (ASEAN), moving up 17.1 percent from the same period last year while exports to developed countries, including the United States and Japan, gained 10.0 percent.
Outbound shipments to the European Union (EU) dropped 7.0 percent from a year earlier, although the Korea-EU free trade agreement has been in effect since July 1. Exports to the United States contracted 5.9 percent, with numbers for China, the largest buyer of South Korean goods, reaching 16.5 percent.
Shipments to Japan and ASEAN rose 30.9 percent and 26.9 percent in the cited month.
The official, meanwhile said that trade surplus figures should improve in September, but cautioned that this will depend on overall economic conditions in overseas markets.