Exports tumble 8.2% on chips, China demand
But with imports also falling, Korea was able to record a trade surplus for the 86th consecutive month, a record. Despite the continuing fall, the government expressed confidence that the situation will improve in the second quarter of this year with higher demand for computer chips and on a better outlook for China’s economy due to government stimulus.
According to the Ministry of Trade, Industry and Energy on Monday, Korea’s exports fell 8.2 percent to $47.1 billion in March. Although this was less jarring than February’s 11 percent drop, export weakness has prompted the government to offer countervailing measures, including expanding trade financing, last month.
In March, semiconductor export fell 16.6 percent to $9 billion. Although that was a slight improvement over February’s 24.8 percent drop to $6.77 billion, semiconductor exports have been shrinking since reaching an all-time monthly record of $12.4 billion last September. Moreover, on-year declines have been seen in semiconductors for four consecutive months since December.
Semiconductors account for 19 percent of all Korean exports. While exports of semiconductor to the United States rose 32.4 percent to $320 million, exports to China, a major customer, fell 31.9 percent from the same period a year ago to $2.3 billion. The ministry said one of the biggest reasons for falling exports of semiconductor was weak sales of smartphones, as first quarters are usually a slow season.
Overall exports to China fell 15.5 percent to $11.5 billion. China is Korea’s biggest export market, taking 24 percent of all exports. General machinery exports to China were down 9.1 percent and petroleum goods down 20 percent. Mobile telecommunications equipment, which includes smartphones, fell 49 percent.
If you exclude semiconductors, the ministry said, exports last month actually rose 5.9 percent, a turnaround from February’s 8 percent decline. And if you exclude the weak China market, exports rose 5.5 percent, a significant improvement from February’s 9.4 percent decline.
Among the major 20 export items exported by Korea, which now include so-called new industries, such as robotics, only four areas had good growth: ships, fuel cells, biohealth and electric vehicles (EV).
Ships saw an increase of 5.4 percent, fuel cells rose 10.2 percent and biohealth exports were up 13 percent. EVs exports surged 94.8 percent. The shipping industry is seeing a strong recovery after a terrible slump, especially in orders for liquefied natural gas (LNG) vessels. Orders for ships increased 5.4 percent year on year to $2.1 billion.
The largest orders came from South America at $790 million, up 159.2 percent. Orders from China surged 287.7 percent to $110 million. However, orders from Europe fell 64.2 percent to $230 million while orders from the economies of the Association of Southeast Asian Nations (Asean) dropped 64.2 percent to $150 million.
Among major export items, automotive exports continued to fall.
The ministry said strategic vehicle exports went up, including new SUVs and environmentally friendly vehicles, but a reduced number of working days and the ending of some car models led to sales reductions.
Automotive exports in March retreated 1.2 percent to reach $3.7 billion. While exports to Europe fell 11.6 percent to $500 million, exports to the United States increased nearly 20 percent to $1 billion.
Imports were down 6.7 percent to $41.9 billion, contributing to a trade surplus of $5.2 billion.
Despite the trade surplus, a decline in import is equally worrying considering that Korea’s facilities investment has been on a continuing decline and the manufacturing industry’s operating ratio is falling.
Imports of equipment for manufacturing facilities are a significant portion of overall imports. In March, imports of equipment related to semiconductor manufacturing fell 70.3 percent compared to a year earlier.
Also imports of gasoline cars fell 28 percent year on year due to low demand.
The government remained optimistic, expecting the situation to turn around in the second quarter.
“In the case of semiconductors, we expect export volumes to improve compared to the first quarter,” said Park Tae-sung, head of trade and investment at the Trade Ministry.
Park added that in the case of China, while the ongoing trade conflict between it and the United States remains a major factor, the recent drive by the Chinese government in stimulating its domestic market will have a positive effect on Korean goods exported to China.
“We expect consumer goods [exports] to improve as of the first quarter,” Park added.
He added that the government expects exports from biohealth goods and environmentally friendly vehicles to continue to grow.
“The government is continuing to strengthen measures that will improve the competitiveness of major industries,” Park said, “especially in products that overlap with China.”
BY LEE HO-JEONG [firstname.lastname@example.org]
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