Typical Recession-type Black-Ink

The export in July decreased by 10.2% compared to the same month of last year, recording 17 consecutive months of a decline.
The export in July decreased by 10.2% compared to the same month of last year, recording 17 consecutive months of a decline.

 

The export in July decreased by 10.2% compared to the same month of last year, recording 17 consecutive months of a decline. The decline was influenced by the decrease of operating days, the drop of ship deliveries, and the overall slowness of the major industries including automobile, petrochemicals, and steel.

The trade balance, on the other hand, recorded a surplus for 54 consecutive months amid the falling exports. It was because the import decreased that much while the export and its unit price showed a continuous downward trend, that is, a typical recession-type trade surplus.

According to the “Export-Import Trend in July” announced on Aug. 1 by the Ministry of Trade, Industry and Energy, the total amount of exports was US$41 billion in July, down by US$4.7 billion or by 10.2% compared to the same month of last year (US$45.7 billion). The falling rate of exports, showing a downhill for 17 consecutive months, decreased to a single digit in May and June this year, but rebounded in July to record double digits.

The main reason for the export decline in July is the decrease of the operating days. The operating days decreased by 1.5 days (6.6%) from a year ago, according to the Ministry of Trade, Industry and Energy. In addition, the export decrease was partly attributable to the 3.3% drop of ship delivery compared to last year.

By industry, the export declines of the major industries such as the likes of shipbuilding, automobile, petrochemicals and steels were remarkable. For the shipbuilding, the decline rate of exports in July sharply rose by 42.5% from a year earlier. It was because the building process of some ships was delayed, although 24 ships including merchant vessels were exported.

The automobile export showed a 14.6% decrease, continuing the two digits of declines following June. It was influenced by the depression in demand in the emerging economies and a total of 36 hours of the local strike.

Exports in the petrochemical industry also decreased by 12.3% compared to the same month of last year. The enlarged scale of the routine maintenance and the continuing low oil price were the contributors. For the steel, the decline rate, which stayed at a single digit figure, again increased to 11.1% in July. It was affected by the decreased global demand and import regulations from various countries.

The export declines of flat-panel displays, petroleum products, and general machinery showed rather a mitigation. For the flat panel display, the decline slowed down to -19.2% in July from 25.2% in June. The export decrease of petroleum products improved to -9.4% from the -27.2 in June, which was influenced by the increase in gasoline exports as the Korea-Vietnam FTA took effective.

The export of general machinery recorded a -3.7% decline in July, down from -4.6% in June with the recovery of exports to the European Union and Japan continuing.

Computers, however, recorded an increase in the export for three consecutive months. The overall exports last month increased by 39.1% compared to the same month of last year. It was the highest YoY increase since January in 2010, due to the increase in demand of computer component replacement with the expiration date of free Windows 10 upgrade ahead, and the increase in SSD exports resulting from the acceleration of the shift from hard disk to SSD.


Among the exports of the big 5 promising consumer goods, those of cosmetics, medicines, living and baby products, and agriculture & fisheries foods showed a continuous increase, except for that of fashion & ·clothing products which recorded a decrease of 9.1%.

By region, the increase rate in the export to Vietnam was the highest. In July, the export to Vietnam increased by 7.6%, showing an upward trend for six consecutive months since February. Exports to India and the U.S., on the other hand, decreased by 10.1% and 14.3% respectively, influenced by the weakened wireless communication devices and steels.

Analysts say the overall decline in the export was affected by the decreased unit price owing to the lower oil price and the global oversupply. The decline in the export volume decreased but the unit price dropped greatly. The export volume in July grew by -1.6% compared to June (-2.9%).  Nevertheless, the unit price increase rate again turned into a negative number (-8.8%), from the 0.2% in June.

 


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