By Yoon Ja-young
The country’s exports continued to drop in March, falling for 15 consecutive months. The government, however, expects indices may improve in the near future with the recovery of oil prices.
According to the Ministry of Trade, Industry and Energy, the country’s total exports in March recorded $43 billion, which is 8.2 percent less from a year ago.
Exports have been sliding since January last year, marking the longest decrease ever. It dipped 14.3 percent in December, 18.9 percent in January and 12.2 percent in February.
The ministry attributed the sluggish exports to low global oil prices, falling export prices and sluggish global economy.
The dip was especially notable in oil products and ships. Exports of oil products plunged 41.6 percent on low global oil prices, while exports of ships dipped 28.9 percent.
Exports of automobiles also decreased 5.7 percent due to slowdown in China, while semiconductor exports fell 1.5 percent.
Outbound shipment of mobile devices, meanwhile, increased 19.9 percent thanks to new smartphones like Galaxy S7 and G5.
The country sustained $9.8 billion trade surplus as imports stood at $33.2 billion, falling 13.8 percent from a year ago.
“Exports will likely continue decreasing on low oil prices as over half of Korea’s export items are affected by oil prices,” said Cheong Seung-il, heading office of international trade and investment at the ministry.
“The recovery of oil prices is crucial for exports to rebound,” he added.
Market analysts expect oil prices may rebound as some oil producing countries agreed to freeze the amount of the oil they produce. According to Korea National Oil Corporation, prices of Dubai crude recovered to $35.05 per barrel from $31.65 on February 1. The ministry expects that the rebound in crude oil prices will be reflected in oil products and petrochemicals soon.
The continuous decline of exports and the larger decline in imports, meanwhile, is leading to the current account surplus.
According to the Bank of Korea, the country’s current account recorded $7.5 billion in February, having a surplus for 48 months.
Ju won, an economist at Hyundai Research Institute, said that the recent decline in exports is especially due to falling export prices. He said it would be difficult for exports to immediately rebound as the prices of nine out of the country’s 13 main export items are dropping.
He said the government should take aggressive measures to boost exports as well as stabilizing the economy so that declining exports wouldn’t negatively affect domestic consumption as well.
“What is crucial for the government for now is to take short-term and flexible measures to overcome the lack of demand overseas, instead of focusing on structural problems such as a poor competitive edge.”
He added that it is impossible to pull up exports without the Chinese market. He advised actively using the free trade agreement (FTA) between Korea and China as well as focusing on advancing into high-growth regions within the country.
“As China is a big open economy, its demand for imported goods is still huge despite small setbacks in their economic growth. Increasing government-to-government transactions through diplomacy and increasing Korean firms’ participation in the public sector market in China can boost the economies of both country’s,” he said.