Korea's trade deficit with Japan is expected to hit a 16-year low this year. Analysts say that the recent boycott of Japanese products has contributed to the decrease in imports of consumer goods.
In particular, some predict that if the Korean government succeeds in strengthening the competitiveness of the "materials, components, and equipment" sector in the wake of Japan's export regulations, the trade balance with Japan could change in the long term.
According to the Ministry of Trade, Industry and Energy and the Korea International Trade Association on Nov. 18, the trade deficit with Japan was $16.36 billion by the end of last month, down 20.6 percent from $20.6 billion in the same period last year.
Based on the January-October period, Korea posted the smallest deficit since 2003 when it posted $15.5 billion.
If this trend continues, it will also mark the first annual trade deficit with Japan in 16 years with less than $20 billion since 2003 when it reached $19 billion. This is only half of the record high of $36.1 billion in 2010.
Among Korea's top 10 trading partners, Japan and Taiwan are the only countries that show unfavorable trade balance this year. As for Taiwan, Korea's trade deficit has remained less than $20 million until the third quarter of this year, which is no comparison with Japan.
The reason why its trade imbalance with Japan has been "improved" this year is what the drop in imports far exceeded that in exports.
Exports to Japan reached $23.7 billion in the first 10 months of the year, down 6.5 percent from the same period last year, but imports totaled $40.1 billion, down a whopping 12.8 percent from a year earlier. The drop in imports from Japan is expected to hit a record high this year since 14.7 percent in 2015.
"The government and the private sector have increased their awareness of the importance of the materials, components and equipment industry after the Japanese restriction on exports to Korea," Moon Byung-ki, a senior researcher at the Korea International Trade Association, said in an interview with Yonhap News Agency.
He added, "It may be difficult to expect great results in a short period of time, but this may change the trend of chronic trade imbalance with Japan."
