Korea's Q1 Exports Hold Up Well... Only 1.4% Decline

USA -3.1%, Germany -4.0%, Japan -5.4% Decline
China (-13.4%), India (-12.8%) Drop Rates Are 9 Times Higher Than Korea's
Exports Volume Increases Despite Semiconductor Prices and Oil Price Declines, Showing Resilience

[Asia Economy Reporter Hwang Yoon-joo] Despite the COVID-19 pandemic in the first quarter of this year, South Korea's export decline rate was limited to 1.4%, according to a recent investigation. This decrease was smaller compared to advanced countries such as the United States and Germany.

According to the "Impact and Outlook of COVID-19 on Exports" report released on the 7th by the Korea International Trade Association's International Trade and Commerce Research Institute, South Korea's exports from January to March decreased by 1.4%. This figure is relatively lower than that of the United States (-3.1%), Germany (-4.0%), and Hong Kong (-10.7%). Notably, India (-12.8%) and China (-13.4%) experienced declines more than nine times greater than South Korea, indicating they were directly hit by COVID-19.

The reason South Korea's exports performed better than competing countries in the first quarter was that although unit prices fell by 7.7% due to declines in semiconductor prices and international oil prices, the volume of existing contracted goods actually increased by 5.8%.

As a result, during the first quarter, growth rates in China and the Eurozone fell by 6.8% and 3.3% year-on-year, respectively, while the United States grew by only 0.3%. In contrast, South Korea achieved 1.3% growth.

Meanwhile, until March, daily average exports were sluggish mainly in China, ASEAN, and Latin America. However, from April, due to factory shutdowns in the automobile sector and reduced consumption in the United States and Europe, daily average exports in the US and European Union (EU) shifted from positive to negative, further expanding the recent sluggish export trend.

By major industries, exports of semiconductors, petrochemicals, and displays declined due to weakened demand in front-end industries such as automobiles, smartphones, home appliances, and electrical electronics. Demand for steel products and machinery also decreased due to the contraction of manufacturing and construction sectors. From February to April, exports of petroleum products, petrochemicals, ships, automobiles, and semiconductors decreased, accounting for 72.4% of the daily average export decline during this period.

Looking ahead, South Korea's exports are expected to show the largest decline in the second quarter as economic recessions fully materialize in advanced countries like the US and Europe, where confirmed COVID-19 cases are rapidly increasing. However, the downturn is expected to gradually ease afterward, showing a U-shaped recovery pattern.

Meanwhile, despite demand contraction due to the spread of COVID-19, exports of South Korean products recognized globally for their excellence amid changes in consumption patterns and lifestyles are becoming promising. With increased awareness of hygiene and health triggered by COVID-19, exports of clean home appliances, medical supplies, health supplements, and hygiene products are expected to rise.

As trends such as home beauty, home cooking, and home training spread, exports of convenience foods, kitchenware, and sports and leisure goods are promising. Additionally, with the shift to remote work and online lectures, the establishment of home offices and the digitalization of consumption have increased the need for digital devices for non-face-to-face communication and delivery.

Senior Researcher Moon Byung-gi emphasized, "Due to the effects of global economic stimulus measures, export opportunities centered on promising consumer goods are expected to expand from the third quarter onward. Our companies should diversify their export market portfolios to minimize risks, re-examine management strategies to seek new opportunities, and the government should pay more attention and provide support for overseas marketing of export companies."

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