Exports retract for first time in 23 months

Amid recessions in Japan and the United States, Korea`s commodity exports decreased for the first time in 23 months.

The Ministry of Commerce, Industry and Energy said that exports in March decreased 0.6 percent from a year ago to $14.34 billion. It was the first reduction since April 1999`s minus 4.7 percent growth. Imports also shrunk 8.8 percent to $12.96 billion. Overall, Korea enjoyed a $1.38 billion trade surplus. It is expected that the nation`s economic growth rate may slow down if exports continue to fall. Corporate facilities investments dropped and imports declined substantially in line with the strong dollar, and Korea is expected to maintain its surplus. However, it is unclear if Korea will be able to achieve this year`s $10 billion trade surplus target.

Dropoff in commodity exports:

Hit by the U.S. recession, Korea`s exports of semiconductor chips and computers decreased by 24 percent and 9 percent, respectively. Auto exports also slid by 7 percent as a result of Daewoo`s sluggish shipments. Also, shipments of steel and textiles declined by 3 percent and 9 percent, respectively, while exports of petrochemicals, currently suffering from excessive production, retracted by 1 percent.

Positive results were seen in such areas as ships and offshore plants (27 percent), general machinery (46 percent), auto parts (11 percent), wireless communications equipment (12 percent) and optical telecommunications cable (78 percent).

By region, exports to the U.S. and Japan fell by 2 percent and 3 percent, respectively. Shipments to Southeast Asian countries, including Malaysia, also declined by as much as 10 percent. Sluggish exports to Association of South-East Asian Nations (ASEAN) countries were blamed on their heavy reliance on the U.S. market.

On the other hand, exports to China increased by 16.8 percent and shipments to the European Union and Central and South America jumped by 10.5 percent and 23.4 percent, respectively.

Decline in imports:

The import reduction was largely attributed to a decrease in demand for the raw materials and capital goods that are vital to export industries. These figures fell by 13.8 percent and 11.4 percent, respectively. Blamed was the fact that Korean corporations were cutting imports amid uncertain economic prospects and a strong dollar.

Imports of capital goods fell by 3.8 percent in February, a signal that local firms were reluctant to make facilities investments since the end of last year. Other than semiconductor manufacturing equipment, overall imports of various types of machinery, telecommunications equipment and computers fell.

However, imports of consumer goods such as garments soared by 15.9 percent in line with the recovery in consumer confidence.

Lee Byong-Ki eye@donga.com