Trade deficit with Korea widens 43%
Trade deficit with Korea widens 43%
Bilateral trade between Cambodia and South Korea was worth $552.1 million in the first seven months of this year, growing by nearly 11 per cent on a yearly basis from $498.75 million, according to the Korea International Trade Association (Kita).
In the January-July period, Cambodian exports to South Korea were valued at $188.2 million, inching up by 0.2 per cent year-on-year from $187.80 million, while imports were $364.0 million, surging by 17 per cent from $310.94 million.
This means that the trade deficit widened nearly 43 per cent on a yearly basis from $123.1 million to $176 million.
Kita listed Cambodia’s main exports to South Korea as garments, footwear, travel products, beverages, electrical and electronic components, rubber, pharmaceuticals and agricultural products; and major imports as vehicles, electronics, kitchen appliances, beverages, pharmaceuticals, raw materials and finished plastics and products.
Cambodia Chamber of Commerce vice-president Lim Heng told The Post on August 24 that the simultaneous increase in value of imports and exports was an encouraging sign, saying growth is expected to accelerate when the two countries ratify a bilateral free trade agreement (FTA) after negotiations concluded early this year.
He shrugged off the widening Cambodian trade deficit with South Korea as an inconsequential statistic, pointing out that a substantial proportion of imports from the East Asian country are raw materials or components used in industry to process goods for export to markets around the world.
“A concern would be not to have enough money to import key items to support production and export to international markets,” Heng said.
Meanwhile, Hong Vanak, director of International Economics at the Royal Academy of Cambodia, said the concurrent surge in imports and exports offer some consolation, even if growth rates and the trade balance lean in South Korea’s favour.
With a trade deficit encroaching on 50 per cent, the Kingdom must go all-out to diversify its products and gear up to capitalise on the opportunities and advantages presented by the FTA when it comes into force, he emphasised.
“In order to narrow the trade gap, Cambodia should further consider increasing cooperation with stakeholders, domestically and in Korea, to identify and explore Cambodian products that can be exported to South Korea,” Vanak said.
Kita figures show that Cambodia-South Korea trade amounted to $884.88 million in 2020, from $1.032 billion in 2019.
Cambodia exported more than $317 million of goods to the South Korean market in 2020, which was down by 5.4 per cent year-on-year, and imported over $567 million, plunging by 18.6 per cent over 2019.
