SEOUL – South Korean exports and imports suffered a precipitous decline in the first 10 days of May, underlining a bleak outlook for Asia’s fourth largest economy and international trade as the coronavirus crisis slammed global demand.
Exports contracted 46.3 per cent year-on-year in the period, while imports fell an equally dizzying 37.2 per cent, data from the Korea Customs Service showed on Monday (May 11).
By categories, overseas sales of semiconductors dropped 17.8 per cent, while that for mobile communication devices and petrochemical products contracted sharply by 35.9 per cent and 75.6 per cent, respectively.
The numbers from South Korea, the first major exporting nation to release monthly trade data, underscores the pandemic’s devastating impact across supply chains and businesses, and points to a rough year ahead for international trade.
The export-reliant economy stumbled into its biggest contraction since 2008 in the first quarter even as the Bank of Korea slashed interest rates by 50 basis points to a fresh low of 0.75 per cent in March, as self-isolation measures hit consumption and global trade slumped.
Its two biggest trading partners, the United States and China saw their economies contract sharply in the first quarter, suggesting a recovery in global trade is some way off.
Data released last week for China, the world’s biggest exporter, showed a rebound in shipments but imports marked the biggest contraction since early 2016 – an outcome that backed expectations for a period of frail trade.
“With global demand unlikely to recover quickly, Asia’s export-dependent economies will continue to feel the strain for many months to come,” Capital Economics said in a note to clients.
While some nations have started to slowly ease coronavirus lockdowns, policymakers worldwide are bracing themselves for the worst global recession since the Great Depression.
In April, Korean exports plunged 24.3 per cent year-on-year, the worst contraction since May 2009.
For the first 10 days of May, shipments to both the US and Europe halved from the same period a year earlier, dropping by 54.8 per cent and 50.6 per cent each.
Shipments to China, South Korea’s biggest trading partner, declined 29.4 per cent.
Full month trade data for May will be released on June 1.