South Korea’s exports fall 0.2% in March

South Korea’s exports fell by a small margin in March year-on-year amid the COVID-19 pandemic. The better-than-expected results are in part attributable to increased exports in the fields of information technology (IT) and communications devices with the virus pandemic, triggering a surge in non-contact activities worldwide, such as working from home and online classes. But when the economic downturn begins in earnest in the U.S. and Europe, which are seeing a spike in coronavirus cases, South Korea is likely to experience a significant reduction in exports, according to some forecasts.

The Ministry of Trade, Industry, and Energy announced on Wednesday that the country’s outbound shipments fell 0.2 percent year-on-year to 46.91 billion U.S. dollars in March. The figures are better than expected considering reported concerns about a sharp contraction in exports due to the coronavirus outbreak. The country’s exports rebounded in 15 months in February and remained at a similar level from a year earlier in March, in contrast to a double-digit fall last year.

Computers (82.3%) and wireless communications devices (13.3%) saw the biggest rate of growth in shipment due to increasing non-contact businesses amid the coronavirus outbreak. As for semiconductors, outbound shipment to Europe (41.7%) and the U.S. (40.8%) rose year-on-year although the overall shipment dropped 2.7% from last year. Shipments of computers to the U.S. rose 2.4 times year-on-year in March while those to Europe increased 49.6%.

There has been a surge in exports of COVID-19 test kits, hand sanitizers, and toiletries. The export of test kits rose 2.2 times in March year-on-year to 48.65 million dollars. In March alone, South Korea exported 22.5% of the total amount of export in 2019. The export of test kits grew 50.7% in February as well. The exports of hand sanitizers shot up 81.4% and toiletries jumped 68.9% in March.

As for exports by region, South Korea’s export to China dropped 5.8% year-on-year in March, up from ―10.9% in January and ―6.7% in February. The reasons behind the slight growth include factories resuming their operation in China’s 31 provinces and municipalities and most of the South Korean component companies in China operating normally amid the coronavirus outbreak. South Korea’s exports to the U.S. rose 17.3% year-on-year and exports to the European Union grew 10.0%. In particular, shipment of cars to the U.S. and the European Union grew 13.0% and 10.9%, respectively.

Although South Korea recorded better-than-expected results in March, the export outlook down the road is not promising. Experts say the impact from the COVID-19 pandemic has yet to be realized since export contracts are generally made two to three months in advance.

“There hasn’t been a blow to South Korea’s exports in March since the current figures reflect contracts made in advance. But a setback in export growth is expected between April and May, when both production and demand will be hit hard,” said Jeong In-kyo, professor of International Trade at Inha University.


Hye-Ryung Choi herstory@donga.com