Largest Export Decline in 11 Years Due to COVID-19 Pandemic...Semiconductors Down 14.9% (Comprehensive)

Impact of COVID-19 Intensifies... April Exports Down 24.3% YoY
Demand Plunge and Oil Price Drop... Ministry of Trade Calls It a "Global Phenomenon"
Trade Deficit of $950 Million... First Since January 2012

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] Exports in the past month fell by 24.3% compared to the previous year due to the impact of the novel coronavirus infection (COVID-19). This is the largest decline in about 11 years since May 2009 (-29.4%). As the global spread of COVID-19 intensified, exports in April took a direct hit. The sharp drop in demand from major markets such as the United States and Europe had a significant impact.

According to the Ministry of Trade, Industry and Energy on the 1st, exports in April amounted to $36.92 billion, down 24.3% ($11.86 billion) from the same month last year. This is the largest decline since the global financial crisis in May 2009, which recorded a minus 29.4%. Imports were $37.87 billion, down 15.9% ($7.18 billion) from the same month last year. As a result, the trade balance showed a deficit (-$950 million) last month for the first time in 99 months.

Major Countries and Items Show Negative Export Trends…Semiconductors -14.9%

By country, exports plummeted in major export countries such as the United States (-13.5%), China (-17.9%), ASEAN (-32.9%), the European Union (EU, -12.8%), the Middle East (-20.7%), Japan (-12.0%), and India (-59.7%).

Among the top 20 major export items, 17 showed negative growth, reflecting the shockwave of COVID-19. Most items declined, including semiconductors (-14.9%), general machinery (-20.0%), petrochemicals (-33.6%), automobiles (-36.3%), steel (-24.1%), petroleum products (-56.8%), ships (-60.9%), automobile parts (-49.6%), and displays (-39.1%).

The export slump last month was influenced by decreased demand in major markets such as the United States and the European Union (EU) due to the full-scale spread of COVID-19. Demand shrank as countries implemented movement restrictions and factory shutdowns, leading to a decrease in exports.

In particular, exports to the EU decreased mainly in automobiles (-21.4%), automobile parts (-53.5%), general machinery (-17.6%), and steel (-33.3%). The EU's average daily export amount recorded $200 million, the lowest since January this year.

The decline in U.S. exports was due to sluggish sales of consumer goods such as smartphones (wireless communication, -63.8%), automobiles (-16.7%), and home appliances (-9.2%).

Monthly Export Amount Increase and Decrease (Source: Ministry of Trade, Industry and Energy)

The decline in export unit prices due to falling oil prices also had an impact. Looking at export unit prices by item, petroleum products fell by 52.9% compared to last year, and export unit prices of petrochemicals (-29.0%), ships (-38.6%), and steel (-11.9%) also decreased significantly.

However, biohealth products (29.0%), favored for Korean-made quarantine products such as diagnostic kits, and computer exports (99.3%), which showed robust server demand, performed well.

The Ministry of Trade, Industry and Energy explained, "Exports to China were mainly sluggish in February and March, but in April, exports decreased across all regions due to deteriorating conditions in major markets such as the United States, EU, and ASEAN." It added, "The export slump caused by COVID-19 is a global phenomenon, not just in Korea."

The ministry also explained that the shortage of working days and the reverse base effect contributed to the increased export decline. In April last year, the number of working days was 24, two days more than this year, and exports reached $48.78 billion, the highest level of the year.

Trade Deficit for the First Time in 99 Months…Sung Yun-mo: "Not Negative"

The trade deficit, which appeared for the first time in 99 months since January 2012, was analyzed as a temporary phenomenon caused by the COVID-19 situation.

The Ministry of Trade, Industry and Energy said, "Our manufacturing industry is operating normally without shutdowns compared to major countries during the COVID-19 situation," adding, "A temporary trade deficit occurred because the rate of decrease in imports was lower than that of exports."

Sung Yun-mo, Minister of Trade, Industry and Energy / Photo by Hyunmin Kim kimhyun81@

The ministry compared last month with January 2009, when a trade deficit occurred due to the global financial crisis. At that time, it was a recession-type deficit caused by increased energy imports due to high oil prices and a greater decrease in imports than exports. However, last month, imports of intermediate and consumer goods contributing to domestic production decreased relatively less, indicating a favorable import structure.

Minister of Trade, Industry and Energy Sung Yun-mo also said, "The April trade deficit occurred because the decrease in exports was greater than the decrease in imports," adding, "It is by no means negative as it happened in a situation where capital goods and intermediate goods imports necessary for the normal operation of domestic manufacturing are continuing."

However, Minister Sung said, "We are taking the recent export slump in Korea due to COVID-19 very seriously," and "We will sufficiently and timely supply trade finance worth 36 trillion won to solve liquidity shortages of export companies."

He continued, "To respond to strong movement restrictions and entry restrictions by countries, we will fully digitalize export marketing and expand video consultations and online exhibitions."

He added, "The post-COVID-19 era is expected to be led by untact industries, homeconomy, and K-quarantine industries," and "We will continue to foster new export growth engines such as 5G infrastructure, medical devices including diagnostic kits, processed foods, and cleaning agents."

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