Trade Deficit After 99 Months... Production and Consumption Frozen

April Export Decline Widens Significantly
Import Decline Relatively Small
As of 20th, -$3.5 Billion... Surplus Streak Stops
March Industrial Production Down 0.3%·Consumption Down 1%

[Asia Economy reporters Kwangho Lee and Eunbyul Kim] The trade surplus streak is expected to come to a halt after 99 months due to the shock of the novel coronavirus disease (COVID-19). On the 29th, Kim Yong-beom, First Vice Minister of the Ministry of Economy and Finance, said at a briefing on the results of the 1st Emergency Economic Central Countermeasures Headquarters (Economic Central Headquarters) meeting held at the Government Seoul Office, "Although we cannot yet predict the outcome, there is a high possibility that the trade balance for April will show a deficit for the first time in 99 months since January 2012." Vice Minister Kim explained, "While the decline in exports in April has significantly expanded, the decrease in imports is relatively small, and as of the 20th of this month, the trade balance is recording a deficit of about 3.5 billion dollars." From the 1st to the 20th of this month, exports amounted to 21.7 billion dollars, down 26.9% year-on-year, while imports reached 25.2 billion dollars, up 18.6%. The government plans to officially announce the export and import performance for April on the 1st of next month.

According to the industrial activity trends for March released by Statistics Korea on the same day, the real economy shockwave caused by COVID-19 is intensifying. Last month, total industrial production (seasonally adjusted, excluding agriculture, forestry, and fisheries) decreased by 0.3% compared to the previous month. Production in service sectors such as accommodation, restaurants, transportation, and warehousing fell by 4.4% month-on-month, marking the largest decline since statistics began in 2000. Ahn Hyung-joon, Director of Economic Statistics Trends at Statistics Korea, explained, "Although industrial production improved due to the resolution of automobile parts supply issues and the effect of the individual consumption tax reduction policy, excluding these factors, the situation is not favorable." Retail sales, which indicate consumption, decreased by 1.0%, marking a decline for three consecutive months.

As production and consumption continue to decline, the coincident and leading indices, which represent current and future economic conditions, have fallen at the largest rate since the 2008 financial crisis. The coincident index decreased by 1.2 points from the previous month to 98.6, the largest drop in 11 years and 3 months since December 2008. The leading index also fell by 0.6 points to 99.6, marking the largest decline in 12 years and 1 month since February 2008. Director Ahn stated, "The impact of overseas factors such as the U.S. and Europe on Korea is still limited. However, in April, the spread of COVID-19 and economic lockdowns in major export countries are expected to significantly affect manufacturing exports and production."

Corporate sentiment has already fallen to levels comparable to those during the financial crisis, further darkening future prospects. According to the 'April 2020 Business Survey Index (BSI)' released by the Bank of Korea on the same day, the BSI for overall industrial business conditions dropped 3 points from the previous month to 51, the lowest level since December 2008 (51). The manufacturing sector faced an export cliff centered on automobiles and electronics, while the non-manufacturing sector worsened due to sluggish production activities, leading to a significant decrease in industrial electricity and gas sales. In particular, the non-manufacturing business sentiment index recorded the lowest level ever for two consecutive months.

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