Plummet of 12.2%
The Ministry of Trade, Industry & Energy announced on March 1 that Korea’s total exports decreased 12.2% from a year ago to US$36.4 billion last month. The exports showed a double-digit year-on-year decline for the third consecutive month.
Such a rapid decline was led by a drop in exports to China as well as the other emerging markets. Last month, Korea’s exports to China and the EU region decreased 12.9% and 2.2%, respectively. On the contrary, the exports to Vietnam increased by 17.9% after having fallen by 8.2% in January this year and the exports to the United States showed an increase of 4.2%.
Amid the rapid decline in exports, the Korean government’s and the Bank of Korea’s economic growth rate targets at 3.1% and 3.0% are being increasingly challenged. The drop in exports is likely to lead to sluggish domestic consumption and an annual economic growth rate of less than 3%.
Under the circumstances, economic experts are coming up with more negative forecasts. For example, Consensus Economics presented an estimate of 2.7% last month, down 0.1 percentage point from a month ago. For reference, Korea recorded an annual economic growth rate of 2.6% last year. In February this year, Korea’s total imports decreased 14.6% to US$29 billion and it posted a trade surplus of US$7.4 billion, remaining in the black for 49 months in a row.