South Korea's trade surplus in industrial parts and materials hit a fresh record high in the first half of this year despite a reduction in exports that was offset by imports contracting at a faster clip than exports, a government report showed Thursday.

Trade surplus in the industrial parts and materials sector reached 43.3 billion U.S. dollars for the first six months of 2012, up 8.4 percent from the same period of 2011, according to the Ministry of Knowledge Economy. The amount was larger than any first-half figure, the ministry said.

The first-half reading was over four times larger than the trade surplus of 10.7 billion dollars for all industries, indicating that trade deficit in other industries were made up for by the surplus in the parts and materials sector.

The record high surplus came as imports retreated faster than exports. Overseas shipments of industrial parts and materials contracted 1.1 percent to 123.8 billion dollars in the first half, while imports tumbled 5.6 percent to 80.6 billion dollars over the same period.

Global economic slowdown caused by Europe's debt crisis dragged down both exports and imports, but slowing imports from Japan led to a reduction in trade deficit with Japan, contributing to the record high surplus, the ministry said.

The country's trade deficit with Japan for the parts and materials sector logged 10.82 billion dollars during the January- June period, down 7.6 percent from the same period of last year.

Imports from the neighboring country declined 7.8 percent to 18. 5 billion dollars over the cited period. The import growth continued to fall as seen in a 0.7 percent dip in the second half of 2011, a 9.6 percent expansion for the first half of 2011 and a 17.8 percent jump in the second half of 2010.

Exports to the European Union (EU) and China contracted 2.4 percent and 6.6 percent each in the first half from a year before due to the prolonged European fiscal crisis and economic slump in China, but shipments to the United States expanded 10.5 percent thanks to positive effects from the implementation of the Korea-U. S. free trade agreement (FTA).

By item, exports of transport machinery parts advanced 10.8 percent in the first half from a year earlier thanks to robust demand for auto engines and engine parts from the U.S. and Europe, but overseas demand for locally-made information technology (IT)- related components such as chips and flat panels shrank 6.2 percent due to weak demand for the parts amid the global economic downturn.

Shipments of primary steel products such as hot-rolled steels grew 1.1 percent on-year in the first half, down from a 29.2 percent increase a year before, while exports of chemical products contracted 6 percent over the cited period.

Xinhua