South Korea remains one of East Asia’s manufacturing powerhouses, heavily reliant on global trade. However, in 2022, external headwinds led to a contraction in global demand, resulting in South Korea's export volumes falling compared to the previous year.
At the same time, a noticeable domestic economic slowdown and falling consumer confidence significantly reduced domestic demand for foreign goods. Consequently, imports fell even more sharply than exports.
Table 1: South Korea's Trade Growth Rates (2022 vs 2021)
| Trade Component | Annual % Change (2022) |
|---|---|
| Exports | -1.5% |
| Imports | -3.8% |
Using the information provided, explain how it was possible for South Korea's trade surplus to widen in 2022 despite a fall in the level of exports.
38 exam-style questions on OCR A Level Economics Balance of payments. Each one has a worked solution and a mark scheme showing where the marks go.