South Korean exports plunged nearly 27% in the first 20 days of April as the coronavirus health crisis paralysed global manufacturing activity and crushed consumer demand.
The worst may be yet to come with many of the country’s top trading partners still in lockdowns to contain the virus’ spread. Monthly trade data from Asia’s fourth-largest economy is considered a bellwether for world trade as it is the first to be released among major exporting nations.
Shipments fell 26.9% from a year earlier, sharply reversing 9.3% growth in the March 1-20 period, the Korea Customs Service data showed on Tuesday. Imports sank 18.6%, compared with a 4.0% rise in the previous month.
“Today’s data come as the global economy is in a bad shape, while shutdowns in car component factories abroad and a price plunge in petrochemical products have had a negative impact,” a customs agency official told Reuters.
A breakdown of the trade data showed overseas sales of semiconductors, the nation’s top-selling item, tumbled 14.9%, while those of petrochemical products, car components and wireless devices plummeted 53.5%, 49.8% and 30.7%, respectively.
By destination, shipments to the biggest trading partner China fell 17.0%, even as factories there resumed operations, while those to the United States and the European Union slumped 17.5% and 32.6%, respectively.
“The trend in exports slump could continue through June … It will take a while for the United States and Europe to resume economic activities, while not only the volume of exports but a significant price drop of the goods are a great concern,” said Park Sang-hyun, chief economist at Hi Investment & Securities.
“Uncertainties for an export rebound in the third quarter remain high,” Park added. The spread of the coronavirus has been slowing in major economies, prompting debate over whether to ease tough virus containment measures, but the peak of the outbreak still lays ahead as reported cases surpassed 2.41 million globally, according to a Reuters tally.
Businesses have been paralysed as lockdowns across the globe knocked demand and disrupted manufacturing and global supply chains. During the global financial crisis of 2008, South Korea still managed 0.8% growth but it contracted 5.1% in 1998 during the Asian financial crisis.
Preliminary first quarter GDP data on Thursday is expected show the economy suffered its sharpest contraction since 2008 in sequential terms, a Reuters survey found on Tuesday.
From a year earlier, the economy was seen growing 0.6% in the first quarter, slowing from 2.0% growth seen three months earlier. A growing number of economists now expect the South Korean economy to contract this year along with the global economy, with the International Monetary Fund seeing a 1.2% drop. The trade ministry is expected to release the data for full month at 0000 GMT on May 1.
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