Exports Turn Positive After 15 Months... Daily Exports to China Down 21% Due to 'Corona' (Comprehensive)

February Exports Up 4.5% Year-on-Year
Ministry of Industry: "Thanks to Semiconductor DRAM Price Increase"

Excluding 3.5 More Working Days,
Daily Average Export Value Down 11.7%

'COVID-19 Uncertainty' Persists
Daily Average Exports to China Down 21.1%
"Need to Monitor COVID-19 Prolongation in March as Well"

Amid a sharp decline in cargo imports from China due to the recent novel coronavirus impact, on the 6th, the designated warehouse at Incheon Airport Customs in Yeongjongdo, Jung-gu, Incheon, showed a noticeably empty appearance compared to its usual state filled with cargo./Yeongjongdo=Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Moon Chaeseok] South Korea's exports turned positive for the first time in 15 months. The government attributed this to favorable factors such as the rise in semiconductor DRAM prices. However, due to the impact of the novel coronavirus disease (COVID-19) outbreak, the average daily export value reverted to negative after one month, and exports to China decreased by as much as 21.1%.

According to the "January 2020 Export-Import Trends" released by the Ministry of Trade, Industry and Energy on the 1st, last month's export value (based on customs clearance) was $41.26 billion, up 4.5% compared to the same month last year. This marked the first positive change in South Korea's exports in 15 months since December 2018.

Last month's imports increased by 1.4% year-on-year to $37.15 billion. The trade balance recorded a surplus of $4.12 billion, marking 97 consecutive months of surplus.

The Ministry of Trade, Industry and Energy stated that the increase in exports in February was due to improved performance in key items such as semiconductors, but the 'base effect' caused by an increase in working days cannot be ignored. Last month, the number of working days was 22.5, which was 3.5 days more than the 19 days in February last year. This year is a leap year for the first time in four years, and unlike this year, last February had the Lunar New Year holiday.

When excluding the effect of working days, the average daily export value clearly shows the impact left by COVID-19.

The average daily export value reverted to negative after one month. The average daily export value in February was $1.834 billion, down 11.7% compared to the same month last year, shrinking from $2.078 billion the previous year.

In particular, exports to China shrank. Last month, South Korea's export value to China decreased by 6.6%. When calculated on an average daily basis excluding working days, it dropped by as much as 21.1%.

In January, the Ministry of Trade, Industry and Energy announced that South Korea's export value to Hubei Province was only $1.76 billion, accounting for just 0.3% of the total, but it was difficult to avoid the shock of COVID-19 experienced worldwide.

An official from the Ministry of Trade, Industry and Energy said, "We will do our best to minimize the impact of COVID-19 on exports and maintain export momentum."

Among the top 20 major items, 15 items saw an increase in average export value. Exports increased in semiconductors (9.4%), wireless communication (22.2%), computers (10.6%), general machinery (10.6%), automotive parts (8%), home appliances (13.5%), textiles (8%), biohealth (2.6%), and secondary batteries (2.5%).

In particular, semiconductors turned positive for the first time in 15 months by increasing 9.4% year-on-year last month. This was attributed to steady growth in data center server demand and the fixed price of DRAM rising for two consecutive months.

Last month, the fixed price of DRAM was $2.88. It had fallen from $8.19 in September 2018 to $2.81 during October to December last year, then rose to $2.84 in January and $2.88 last month.

However, the Ministry of Trade, Industry and Energy acknowledged that if the impact of COVID-19 prolongs, it will be necessary to monitor whether semiconductor exports can continue to stay positive from this month onward due to weak demand.

Meanwhile, the government made strenuous efforts to minimize the impact of COVID-19 by increasing trade finance support by 3.1 trillion won more than planned at the end of last month.

Prime Minister Chung Sye-kyun held an "Expanded Trade Strategy Adjustment Meeting" at the Korea International Trade Association in Samseong-dong, Seoul, on the 20th of last month and announced measures to resolve corporate difficulties caused by COVID-19 and support exports.

The government will provide trade finance worth 260.3 trillion won, which is 3.1 trillion won more than before, to minimize corporate liquidity constraints. Of this, 156 trillion won will be disbursed in the first half of the year. Trade finance for small and medium-sized enterprises and mid-sized companies will also be supplied at a record high of 105 trillion won.

A new facility investment support program worth 4.5 trillion won will be established, and preferential support will be promoted for returning companies participating in industrial technology research and development (R&D).

Above all, the government decided to expand the scope of corporate tax reductions for returning companies. This reflects acceptance of the criticism that the COVID-19 crisis necessitates a comprehensive review of the global value chain (GVC) of domestic industries overly dependent on China.

Accordingly, the government will actively promote the revitalization of domestic return of Korean companies operating in China, diversification of global value chains (GVC), and attraction of foreign investment.

This content was produced with the assistance of AI translation services.