Exports drop 12.2 percent in February

By Nam Hyun-woo

Korea’s exports have dropped by more than 12 percent from a year earlier.

The Ministry of Trade, Industry and Energy said Tuesday that Korea’s total outbound shipments stood at $36.4 billion in February, shrinking 12.2 percent year-on-year. With this number, the country extended its losing streak in exports for 14 straight months, replacing the previous record of 13 months from March 2001 to March 2002.

Since January last year, the country’s monthly exports tally has been plunging. After sharp decreases in August and October, exports briefly showed signs of recovery with only a 4.7 percent decline, but tumbled again in December with a 13.8 percent drop, January with 18.8 percent and a 12.2 drop percent in February. January’s 18.8 percent drop was the largest drop since August 2009 with 20.9 percent.

Improvements in computer (6.2 percent), wireless devices (2.8 percent) and machinery (2.4 percent) contributed into narrowing the February decline from January, but failed to offset decreases in ships (-46.0 percent), petrochemical products (-26.9 percent), cars (-9.3 percent), semiconductors (-12.6 percent) and flat panel (-22.1 percent).

Organic light-emitting diodes and cosmetic products each showed a 29.7 percent and a 22.4 percent increase from last year, but solid state drives recorded a 4.4 percent decline.

The ministry said that the decline in exports was mainly due to “rising uncertainties, low oil prices and a slow Chinese economy,” adding that such a trend will likely continue until the first half of this year, weighing down the Korean economy.

The timid outlook has cast a cloud over the government’s stated goal of 3.1 percent growth with the aim of reaching $1trillion in foreign trade by the end of this year.

As the global economy is forecast to remain bleak for now, voices are growing that Korea should identify the cause from the inside and not blame external factors.

“This is the time to review the government’s economic policy,” said Kim Chang-bae, research fellow at Korea Economic Research Institute. “Of course external factors have not been favorable in recent years, but the country needs to examine internal factors rather than attribute the plummet to external factors.”

According to Kim, every economy sees a new industry emerging as a new growth engine every 10 to 15 years. However, the Korean economy has been slow in acclimatizing itself to the ever-changing environment and is heavily relying on traditional core businesses, such as shipbuilding, cars and semiconductors.

“It is true that the domestic slump was attributed to harsh global economic conditions, but the country should have sought a way out of it by looking into its companies’ competitiveness,” Kim said. “For that, the government had to come up with proper policies allowing companies to renovate themselves, or at least compensate them through various ways such as manipulating the currency rate.”

Kim added that expanding trade with Middle Eastern countries is an option for breakthrough. “The demand from existing markets will decrease down the road, so companies need to turn their attention to Middle Eastern countries. Iran, in particular, is an indispensible trade partner.”

According to ministry data, exports to the European Union and the United States rose 5 percent and 4.2 percent, respectively, while shipments to China declined 12.9 percent.

The data showed that imports also dropped 14.6 percent to $29 billion in February, extending its losing streak for 14 consecutive months. Korea’s trade surplus stood at $7.4 billion, posting a trade surplus for 46 straight months.