Exports faltering on falling chip sales

By Lee Kyung-min

Korea's exports in the first ten days of March decreased nearly 20 percent from a year earlier, fueling concerns that the nation's economic downturn is deepening amid a global slowdown.

According to data from Korea Customs Service (KCS), the country's export between March 1 and 10 stood at $10.95 billion (12.4 trillion won), a 19.1 percent drop from a year earlier.

The drop came after exports decreased by 12.6 percent in February and 5.9 percent in January, respectively.

On a monthly basis, the nation's exports started contracting in December, with the external shipments standing at $48.27 billion, down 1.7 percent from a year ago.

In March, a sharp fall in exports was driven by falling sales in petrochemicals and chips, which suffered the steepest decline at a rate of 39 percent and 29.7 percent, respectively.

Sales of vessels and ships also dropped 9.7 percent, while telecommunication equipment dropped 4.1 percent.

Experts voiced concerns that exports are likely to remain sluggish as the semiconductor industry, which underpinned the nation's economic growth in 2018, is on course toward further downturn.

“The Korean economy has largely been bolstered by brisk chip sales,” said Lee Chae-woong, a professor emeritus of economics at Sungkyunkwan University.

“Samsung Electronics and SK hynix, the top semiconductor manufacturers continued to post record earnings on the back of robust global demand, but such a performance is highly unlikely in the coming months as global demand is softening.”

In a monthly report, Korea Development Institute (KDI) also expects the current slowdown in the Korean economy will continue due to the falling exports and reduced investment.

The state-run economic institute said the economic outlook remains bleak, a similar assessment made for five consecutive months.

“Hit by a slump in investment and exports, the Korean economy continues to slow down in March,” the state-run economic think tank said.

“Facility and construction investment is dipping faster further backed by related preceding indicators. The production cycle including construction is also showing signs of slowing down,” it said.

The only two sectors that recorded sales increase for the first 10 days in March are home appliances (7.4 percent) and automobile (5.2 percent).

By country, trading volume with the Middle Eastern countries dropped at the steepest rate of 43.9 percent, followed by Japan (29.3 percent), China (23.9 percent), Vietnam (18.4 percent), the U.S. (17 percent) and the EU (10.2 percent).

Imports for the 10 days came to $116 million, a 15.4 percent decrease from a year earlier, due in large part to 10.6 percent drop in equipment import.