Falling Exports
The Ministry of Trade, Industry & Energy announced on November 1 that South Korea’s exports fell 3.2% from a year ago to US$41.9 billion in October.
This is mainly attributable to the strike in the automobile industry and discontinuation of the production of the Samsung Galaxy Note 7. The number of business days was 0.5 days less than in the previous month in October, which resulted in a decline in exports of US$940 million. The strike in the automobile industry and cars flooded in the middle of a typhoon added US$500 million to the decline. The strike had led to a decline of US$920 million in August and US$1.14 billion in September as well. The Galaxy Note 7, in the meantime, reduced the amount of mobile phone exports by US$370 million in September and US$670 million last month. In short, the reasons mentioned above resulted in a decline in exports of 4.9% or US$2.11 billion.
When it comes to South Korea’s 13 major export items, 10 showed a decrease in exports last month except for ships (up 49.4%), computers (up 7.1%) and semiconductors (up 1.7%). Specifically, automobile exports fell 11.8% and mobile phone exports fell 28.1%, the highest rate of decrease in 51 months. Likewise, textile, auto parts, flat panel display and petroleum-based product exports went down by 8.7%, 6.8%, 4.7% and 4.5%, respectively. On the contrary, cosmetics, OLED and solid state drive exports increased 43.7%, 21% and 17.4%, respectively.
Exports to China, which accounts for 25% of South Korea’s total exports, fell 11.3% last month and continued to decline for 16 months in a row. Those to the United States, which represents approximately 15%, decreased by 10.3% and showed a negative growth for the fifth consecutive month, too. Those to India and Latin America dropped by 18.8% and 10.5% whereas those to Vietnam and the Middle East increased by 19.9% and 10%, respectively.
South Korea posted a trade surplus for the 57th consecutive month in October but its service balance is continuing to deteriorate. According to the Bank of Korea, its service account deficit added up to a 69-month high of US$2.54 billion in September as the deficit related to transport increased in the wake of the receivership of Hanjin Shipping. The tourism deficit and that related to intellectual property fees reached US$1.09 billion and US$390 million, too. The cumulative service account deficit for the first three quarters totaled US$13.82 billion, up 25.2% from a year ago.