Exports Plunge 18.6%... Experts Urge "Urgent Support" vs Government's Optimism (Comprehensive Report 2)

KCS Announces 'April 1-10 Export-Import Status'
Exports $12.2 Billion, COVID-19 Pandemic Shock
Even Semiconductors, Which Had Performed Well, Down 1.5%
Experts: "Urgent Support Needed for SMEs and Mid-sized Companies"
Ministry of Industry: "Need to See Full April Performance"... Maintains Cautious Stance

[Image source=Yonhap News]

[Asia Economy Reporters Changhwan Lee, Bokyung Kim, Chaeseok Moon] South Korea's early April exports plummeted nearly 19% compared to last year due to the adverse effects of the novel coronavirus disease (COVID-19). The global demand decline caused by the COVID-19 pandemic even impacted semiconductor exports, which had been a reliable sector, casting a shadow over April's export performance.

According to the Korea Customs Service on the 13th, the export value from April 1 to 10 (provisional customs clearance basis) was $12.2 billion, down 18.6% ($2.8 billion) from the same period last year. The global spread of COVID-19, sluggish trade, economic slowdown, and falling oil prices negatively affected South Korea's exports. The number of working days was the same as last year (8.5 days).

Major Items and Countries' Exports Decline Due to COVID Shock... Even Semiconductors Show Signs of Slump

During this period, exports across all major items and countries turned negative, highlighting the shockwave of COVID-19. By item, most major products decreased, including semiconductors (-1.5%), passenger cars (-7.1%), petroleum products (-47.7%), wireless communication devices (-23.1%), and automobile parts (-31.8%). By country, major destinations such as China (-10.2%), the United States (-3.4%), the European Union (EU, -20.1%), Vietnam (-25.1%), and Japan (-7.0%) also showed negative growth.

In particular, even semiconductor exports, which had served as a pillar, are showing signs of decline. Semiconductor exports, which increased by 9.4% year-on-year in February, had held up until last month. Although semiconductor export value decreased by 2.7% compared to the previous month due to the base effect of March last year, which recorded the highest export value of the year, export volume increased by 27.0% year-on-year.

However, the real shock is just beginning. COVID-19 is spreading uncontrollably in major export countries such as the United States and Europe. Market research firm IC Insights forecasts the global semiconductor market size to shrink by 4% to $345.8 billion this year compared to last year. IC Insights had initially projected an 8% growth in the semiconductor market in January but lowered it to 3% last month. Now, within a month, they have significantly downgraded their forecast again.

Another market research firm, Gartner, also predicts the global semiconductor market will contract by 0.9% compared to last year. Although the expansion of remote work, online education, and server expansions by major IT companies like Google and Amazon drove semiconductor demand, this appears to be a 'short-lived positive factor.'

Experts Say "If Semiconductor Exports Decline, It’s a 'No-Win Situation'"... Ministry of Trade, Industry and Energy Maintains 'Cautious and Positive' Stance

Professor Insu Kang of Sookmyung Women's University said, "As global consumption shrinks severely, it inevitably negatively impacts our exports. While the semiconductor market needs to be observed further, if demand decreases and non-memory exports also decline, it would be a 'no-win situation' for us."

Professor Yoon Heo of Sogang University advised, "Due to the shock of falling oil prices, petroleum product exports have plummeted, and automobile parts exports have been halted due to consumption cliffs in the U.S., China, and the EU, creating an emergency situation. The government needs to support industries with strong pandemic shocks and significant employment effects, especially self-employed individuals and small to medium-sized enterprises that lack the capacity to devise self-help measures, with prompt assistance."

Asia Economy DB=Photo by Hyunmin Kim kimhyun81@

Regarding this, the government stated that there may be differences between the performance from the 1st to the 10th and the entire month of April, so it should be observed carefully. They will not jump to conclusions or be overly optimistic or pessimistic based solely on the first 10 days' results.

For semiconductors, the government maintains the existing positive view that "volume remains solid and prices are rising." According to the Ministry of Trade, Industry and Energy's ICT export performance data for March, the price of NAND flash (64Gb) last month was $2.61, marking four consecutive months of increase since December last year. Prices rose from $2.35 in December, $2.46 in January, $2.56 in February, to $2.61 last month.

An official from the Ministry of Trade, Industry and Energy said, "We are monitoring major industries such as automobiles, shipbuilding, aviation, and refining. For semiconductors, an accurate diagnosis can be made on the 1st of next month when volume data is released." He added, "The monthly export-import trend data released on the 1st of each month includes more industry samples and detailed status of some industries with high volume at the end of the month."

Meanwhile, imports during this period amounted to $14.6 billion, down 13% ($2.18 billion) from the same period last year. As a result, the trade deficit from the beginning of this month to the 10th was approximately $2.39 billion.

Among items, imports of information and communication devices (8.5%) and gas (4.1%) increased, but crude oil (-18.0%), semiconductors (-5.4%), machinery (-11.9%), and coal (-40.7%) decreased. Imports mainly declined from the U.S. (-22.4%), the EU (-20.9%), the Middle East (-11.9%), and Japan (-15.2%).

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