SEJONG -- South Korea's exports dropped for the third consecutive month in May due to the growing economic fallout from the pandemic that has disrupted the global supply chain, data showed Monday, but the extended slump was in part cushioned by the recovery in shipments of chips.
Outbound shipments dipped 23.7 percent to hit $34.8 billion last month, compared with $45.7 billion posted a year earlier, according to the data compiled by the Ministry of Trade, Industry and Energy.
Asia's No. 4 economy saw its exports drop 1.4 percent on-year in March, followed by a whopping 25.1 decrease in the following month.
In February, South Korea enjoyed a 3.6 percent rise in its outbound shipments, the first on-year rebound in 14 months. The recovery, however, was short-lived due to the COVID-19 pandemic, which has clobbered the supply chain with lockdowns and social-distancing drives.
Imports surrendered 21.1 percent to $34.4 billion in May, resulting in a trade surplus of $440 million. The country snapped its 98 straight months of having more exports than imports in April.
The May decline was roughly in line with what the market had expected. According to a poll by Yonhap Infomax, the financial arm of Yonhap News Agency, the country's exports were estimated to have dipped by 22.5 percent last month compared with a year earlier.
Exports were expected to rebound from last year's 10 percent drop in annual exports, which was mostly attributable to the weak global chip prices coupled with the Sino-American trade war.
South Korea said the relatively better data came as exports of chips, the mainstay product, advanced 7.1 percent on-year to $8 billion despite the pandemic.
The recovery came as Chinese PC manufacturers resumed their operation of production lines, with the demand for computers also rising across the globe as people worked and took classes from home. Exports of chips had plunged 25.9 percent on-year in 2019.
Exports of products considered beneficiaries of the global pandemic cushioned the falling exports from other areas as well.
Sales of biohealth items shot up 59.4 percent over the period to $1.17 billion on the growing popularity of South Korean COVID-19 test kits.
Exports of computers nearly doubled, jumping 82.7 percent in May. Processed foodstuffs were also among products that gathered ground amid the pandemic.
Outbound shipments of cars, on the other hand, more than halved, falling 54.1 percent to hit $1.8 billion over the period, as the operations of major dealers across the globe were still suspended due to the pandemic.
Exports of petrochemical products sank 34.3 percent due to falling global oil prices, the data showed.
By country, exports to China, the top trading partner, edged down 2.8 percent due to falling demand for machines and textiles. The figure was still significantly better off than other destinations.
"China has been one of the major trade partners with faster economic recovery," Industry Minister Sung Yun-mo said. "Considering that exports to China have returned to the levels before the COVID-19 pandemic, outbound shipments to other regions, including the US and the EU, will also be normalized as the situation is brought under control."
Exports to the United States, the second-largest partner, decreased at a wider range of 29 percent due to the disrupted aviation, automobile and home appliances industries amid the pandemic.
Outbound shipments to the European Union and Southeast Asian countries fell 25 percent and 30 percent, respectively.
The grim export data cast a shadow on South Korea's overall economy.
Last week, the Bank of Korea projected the nation's economy to shrink by 0.2 percent on-year this year on projection that the global COVID-19 pandemic reaches its peak during the second quarter.
But the central bank pointed out that South Korea's economy may contract as much as 1.8 percent if new infections do not plateau by the third quarter.
The South Korean economy grew 2 percent in 2019, marking the slowest expansion since 2009, when it increased 0.8 percent in the aftermath of the global financial crisis.
Earlier, the central bank expected the country's exports will decrease 8.5 percent on-year to $496 billion in 2020, with imports predicted to shrink 9.8 percent to $454 billion.
South Korea has seen ups and downs in its number of coronavirus patients, with the figure experiencing a slight uptick in May due to a rise in new cases traced to clubs and a logistics center.
The country has been considered one of the most successful countries in containing the spread of the highly infectious disease, with around 11,500 COVID-19 patients reported here so far since Jan. 20.
"It was significant that South Korea's imports of capital goods have increased sharply," an official from the trade ministry said during a briefing. The country's imports of capital goods, which are used to make other products, rose 9.1 percent on-year in the month.
"This indicates that the country's production activities remain stable. Thus, our exports could rebound when the situation improves overseas," the official added. The ministry, however, did not provide detailed predictions. (Yonhap)
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S. Korea's exports slump deepens amid pandemic, chips still chug along - The Korea Herald
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