South Korea’s exports are sluggish due to the global economic downturn, weak demand for semiconductors and shrinking investment.
The nation’s exports are more likely to remain sluggish as shipments of information and communication technology (ICT) products fell for the fifth straight month. There is a growing concern that export decline may continue for a long time as they did for 19 months in a row from October 2014 to July 2016.
Tentative calculations indicate that the country’s exports from April 1 to 20 dropped by 8.7 percent to US$29.70 billion (33.90 trillion won) compared to a year earlier because of sluggish semiconductor exports, according to the Korea Customs Service on April 22. With the global economic growth slowing down amid a trade dispute between the United States and China and exports of major products shrinking on lower demand from China, South Korea’s exports are expected to have a downward trend for the fifth straight month. The daily average amount of exports, which took into account the number of working days, declined by 11.5 percent to US$1.80 billion (2.05 trillion won) compared to last year, showing a double digit fall. The number of working days between April 1 and 20 this year was 16.5, up 0.5 from 16 a year ago.
By item, exports of semiconductor chips fell by 24.7 percent, automotive components 4.1 percent and ships 0.7 percent. In short, exports of the nation’s major export products were on the decline. On the other hand, exports of wireless communication devices rose by 39.9 percent, vehicles 4.1 percent and petroleum products 1 percent.
By country, exports to China, which accounted for 26.8 percent of the total exports, decreased by 12.1 percent, the European Union 0.3 percent, Japan 4.8 percent and the Middle East 34.8 percent. Exports to Vietnam increased 4.6 percent, the United States 3.5 percent and Taiwan 1.2 percent.
ICT exports, which have led the nation’s total exports, are highly likely to show a decrease for six months in a row. Total outbound ICT shipments dropped by 16.3 percent from a year earlier on weak demand for the three key export items, including semiconductors, displays and smartphones, according to the data compiled by the Ministry of Trade, Industry and Energy (MOTIE). This is the fifth month in a row that ICT exports have contracted from November last year. As exports of semiconductor chips also show a sharp decline this month, ICT exports are highly likely to fall for the sixth consecutive month.
By major export item, semiconductor chips, , one of the key export items,recorded US$9.13 billion (10.42 trillion won) in exports last month, down 16.9 percent from a year earlier, due to the falling prices of memory chips and slowing demand for system on chips. Exports of displays and smartphones also nosedived by 22.4 percent and 33 percent, respectively, last month to US$1.71 billion (1.95 trillion won) and US$910 million (1.04 trillion won) because of the keen competition with major countries.
As the market conditions of semiconductor chips, which are the key industry in the nation, havegottenworse, exports of materials and parts moved downward in the first quarter of this year for the first time in three years compared to the same quarter. The MOTIE said the country’s exports of materials and components stood at US$67.50 billion (77.05 trillion won) in the first quarter of this year, down 9 percent from a year ago. This is the first drop in the first quarter in three years since 2016. Exports of electronics parts, which took up 37 percent of the total material and component exports, fell by 19.8 percent and chemical products, which accounted for second most, 9.6 percent.