Exports down 10.3 percent in 2019 on weak chip market

Korea’s exports fell 10.3 percent in 2019 after achieving a record high the year before, due mainly to a slump in the global chip market coupled with the trade feud between the world’s top two economies, data showed Wednesday.

The country’s outbound shipments came to $542.4 billion last year, compared with $604.8 billion posted a year earlier, according to the data compiled by the Ministry of Trade, Industry and Energy.

It marked the first time in 10 years for annual exports to drop by double digits in percentage terms.

Imports moved down 6 percent on-year to $503.2 billion. Despite the weak performance, Korea still managed to post a combined trade volume above $1 trillion for the third year. Only nine countries have so far posted a trade volume above $1 trillion for three straight years. The trade surplus came to $39.1 billion in 2019, marking the 11th consecutive year the country has posted a surplus.

Last year’s slump in exports was mainly attributable to uncertainties in the global economy, the ministry said.

The trade row between the United States and China, which are also major trading partners of Korea, was responsible for a loss of $10.7 billion in its outbound shipments, according to its estimate.

Other uncertainties also weighed on the exports, including Britain’s departure from the European Union and the protracted turmoil in Hong Kong.

The industry-wide slump in the chip segment, the backbone of Asia’s No. 4 economy, caused a loss of $32.8 billion. Other negative factors included the decrease in the oil price that led to a decline of $13.4 billion in overall outbound shipments.

For all of 2019, exports of chips sank 25.9 percent on-year to $93.9 billion, while outbound shipments of machinery fell 1.8 percent to reach $52.5 billion.

The decrease in shipments of chips was attributable to a sharp decline in the global price of DRAM and NAND flash. Exports of chips surged 29.4 percent on-year in 2018.

Outbound shipments of automobiles moved up 5.3 percent to $43 billion last year on the back of rising demand for SUVs and environment-friendly automobiles.

The weaker won also helped local carmakers boost their exports, according to the ministry.

Exports of petrochemical products, meanwhile, decreased 14.8 percent to $42.5 billion, due mainly to sluggish global demand amid escalating uncertainties stemming from trade rows and other protectionism.

By country, exports to the United States moved up 0.9 percent on-year in 2019, as the world’s top economy purchased more Korean petrochemical goods and home appliances.

Outbound shipments to China, on the other hand, fell 16 percent as the Washington-Beijing trade war escalated.

Exports to Japan also slipped 6.9 percent, as the Asian neighbor purchased fewer petrochemical products.

The trade row between Seoul and Tokyo, meanwhile, had only a limited impact on the overall exchanges, the ministry added.

On the back of its efforts to diversify the export portfolio, Southeast Asian countries accounted for more than 20 percent of the outbound shipment last year for the first time, rising from 19.1 percent posted in 2018.

For December, the monthly exports slipped 5.2 percent on-year to $45.7 billion to extend their slump to a whopping 13th consecutive month.

Imports fell 0.7 percent on-year last month to $43.7 billion. The country’s trade surplus came to $2 billion in December, marking 95 straight months in which the country’s exports have exceeded imports.

Exports of chips plunged 17.7 percent last month from a year earlier. Outbound shipments of ships also decreased 57.9 percent over the cited period.

When excluding the two segments, Korea’s exports for December edged up 2.6 percent on-year.

Reflecting the progress in the U.S.-China trade negotiations, exports to China advanced 3.3 percent in December, marking the first on-year rise in 14 months. Outbound shipments to the United States moved down 0.4 percent.

Exports are anticipated to rebound in 2020, rising 3 percent to $560 billion, according to the ministry.

Korea expects next year’s exports recovery will largely be led by the chip, bio-health and ship industries.

The outlook for the machine, petrochemical and car industries also remains rosy, according to the ministry’s report.

Exports of steel, displays and mobile devices, on the other hand, are expected to face yet more challenges this year amid the growing global competition.

“Korea will make efforts to revamp its export structures to rebound from losses in the first quarter of this year,” Industry Minister Sung Yun-mo said in a statement.

Amid the sluggish recovery of exports, however, the central bank earlier revised down the economy growth outlook for 2020.

The Bank of Korea earlier said the country’s economic growth is projected to rise at a moderate pace of 2.3 percent this year.

Other domestic and international organizations have also slashed their 2019 growth outlooks for Korea.

The International Monetary Fund revised down its growth outlook to 2 percent from the previous 2.6 percent last month.

Yonhap