South Korea’s exports declined for the fifth consecutive month in May, dragged down by a prolonged trade war between the world’s two largest economies -- US and China-- and a fall in chip shipments.
According to the Korea Customs Service on Monday, exports in the first 10 days of the month dropped by 6.4 percent to $13 billion from the same period last year, posting a trade deficit of $2.1 billion. Exports have been declining since December.
By segment, semiconductor exports fell 31.8 percent, while liquid-crystal display panels and car parts dropped by 48.2 percent and 11.2 percent, respectively.
This data comes after Samsung Electronics’ operating profit plunged 60 percent in the first quarter, hit by waning demand for its memory chips and display panels.
Exports of petrochemicals and automobiles rose by 10.5 percent and 19.2 percent, respectively, driven by the oil price rise and launch of new car models.
By region, exports to China and the US dropped 16.2 percent and 2.8 percent. respectively, affected by their prolonged trade conflict.
Exports to the Middle East nations dropped by 30 percent due to their lackluster economic performance.
Industry watchers said Asia’s fourth-largest economy would continue to see a contraction in exports as the trade battle between the US and China is escalating.
Last week, the US increased tariffs on $200 billion of Chinese goods from 10 percent to 25 percent, heightening tensions with China, which immediately said it would impose “necessary countermeasures.”
The tariff hike would lead to “a drop of 0.1 percent in Korea’s exports in the global market due to falling demand for intermediate goods from China,” said Moon Byung-ki, a researcher at the Korea International Trade Association.
China’s slow economic growth would also lead to a further 0.04 percent fall in the nation’s exports in the global market, he added.
According to a recent report of the Korea Development Institute, the nation’s economy is weak on slowing investments and exports. Concerns are high about an export slowdown to China.
On Monday, Lee Ho-seung, the first vice minister of economy and finance, convened a macroeconomy and finance meeting in Seoul, attempting to weather the global economic uncertainties fueled by the trade dispute.
“If the trade war between the US and China is prolonged, the global economic slowdown and trade contraction will be negative to (Korea’s) exports,” he said.
The government plans to frequently hold meetings with related ministries by monitoring the global financial markets. It has vowed to make efforts to diversify trade destinations to respond to the structural challenges.
By Shin Ji-hye (email@example.com)