Exports plunge sharply on low oil prices

By Kim Jae-won

Korea’s exports tumbled nearly 15 percent last month from a year ago, the sharpest drop in six years, government data showed Tuesday.

Outbound shipments came to $39.33 billion in August, down 14.7 percent from the same month last year, according to data from the Ministry of Trade, Industry and Energy. It marks the eighth consecutive month of decline.

Still, the country’s trade surplus widened to $4.35 billion as imports dropped at a faster rate of 18.3 percent to $34.98 billion during the same period. August marks the 43rd straight month that Asia’s fourth-largest economy has posted a trade surplus, the ministry said.

Economists said the government and the central bank need to exercise more aggressive fiscal and monetary policies to boost exports.

“It is time to cut key interest rate or devaluate the local currency because Korea’s weak price competition is one of factors leading to low exports,” said Jeong Yong-teck, an economist at IBK Securities, in a report.

The plunge in exports was largely due to a drop in oil prices, along with a global oversupply of the country’s key export items, both of which pulled down prices of Korean goods.

In August, the average price of Korean goods shipped overseas tumbled 18 percent from a year earlier, while the overall volume of exports gained 3.8 percent.

Such a drop in prices again stemmed from a large cut in prices of petroleum which plunged 41.1 percent from a year ago and petrochemical products which dropped 26.3 percent during the same period.

By country, shipments to the United States slipped 4.4 percent year-on-year with exports to China, the world’s single largest importer of Korean products, also dropping 8.8 percent.

Shipments to Japan plunged 24.4 percent from the previous year, and shipments to European Union countries also tumbled 20.8 percent.

The drop in imports was attributed to lower oil prices, leading to a 31.3 percent year-on-year plunge in the country’s purchases of raw materials, including energy.

On the other hand, imports of capital goods rose 9.6 percent from a year ago and consumer products hiked 4.5 percent during the same period.