Korea is expected to become the world’s sixth-largest trading country this year amid a slow global economy and sky-high inflation. 

Hong Kong’s decline in ranking due to coronavirus lockdowns in China and soaring energy prices contributed to Korea’s rise. But Korea is suffering its biggest-ever trade deficit this year, with exports starting to shrink in October. 

According to the Ministry of Trade, Industry and Energy on Monday, Korea’s trade is expected to total US$1.4 trillion this year to rank sixth in the world, up from eighth last year. The top five are China, the U.S., Germany, the Netherlands and Japan. 

Korea’s exports of cars and petroleum products have risen to fresh record highs, and semiconductor shipments are expected to set a new benchmark. 

Cumulative exports to the U.S., India and ASEAN already set a new record by November, while those to the EU are also likely to reach a new high by the year-end. 

But a closer look shows some worrying developments. Korea’s improved ranking is largely due to rising global energy prices as it imports most of the oil and gas it needs and petrochemical products are key exports. 

Rising energy imports have meant a trade deficit every month since April, and now exports are also declining amid the global economic slowdown. The Korea International Trade Association estimates this year’s cumulative exports at $690 billion and imports at $735 billion, resulting in a deficit of $45 billion. 

The outlook for next year remains bleak. Korea is forecast to suffer a trade deficit of W13.8 billion with exports declining to $662.4 and imports to $676.2, according to the association.