Early September exports down 0.2%... Dark clouds over Corona resurgence and trade conflicts (Comprehensive)

Korea Customs Service Announces Export-Import Trends from September 1-10
Decline Narrowed Due to Working Days and Quarter-End Effects
Daily Average Exports Show Double-Digit Drop... Oil Prices Down 30%
External Factors Including Huawei Supply Suspension and Lockdown Measures in China

[Image source=Yonhap News]

[Asia Economy Reporters Kim Bo-kyung and Moon Chae-seok] In early September, South Korea's exports were hit again due to the persistent spread of the novel coronavirus disease (COVID-19) and the impact of falling oil prices. Although the export decline narrowed by 0.2% due to the effect of working days, the average daily export value decreased by double digits (about 12%). External factors such as the resurgence of COVID-19 and the US-China trade conflict are making export prospects even more challenging.

The Korea Customs Service announced on the 11th that South Korea's exports from the 1st to the 10th of this month recorded $15 billion, down 0.2% ($30 million) compared to the same period last year. During this period, the number of working days was 8.5, one day more than last year. Considering the working days, the average daily export value was $1.76 billion, a decrease of 11.9% ($240 million) compared to the same period last year. The decline in global demand and worsening economic conditions continued to push international oil prices down, acting as a negative factor for exports.

By export item, semiconductors (43.2%), passenger cars (8.4%), and precision instruments (14.2%) increased, while wireless communication devices (-14.9%), petroleum products (-47.0%), and automobile parts (-7.9%) decreased. A Ministry of Trade, Industry and Energy official explained, "In the case of semiconductors, exports increased due to the end-of-quarter effect in September and favorable conditions from companies expanding servers," adding, "Petroleum products were significantly affected by price declines as international oil prices fell more than 30% compared to the same period last year."

By export destination, exports to China (9.7%), the United States (5.2%), and Vietnam (7.2%) increased, whereas exports to the European Union (EU, -0.8%), Japan (-21.1%), and the Middle East (-22.4%) decreased. Recently, the number of COVID-19 cases has been rising mainly in major countries in Europe and the Middle East, showing signs of a resurgence of the infectious disease. An official from the Ministry of Trade, Industry and Energy stated, "Except for China, there is practically no country completely free from the impact of COVID-19," and added, "Since external variables are so significant, we need to closely monitor the reemergence of COVID-19 in major countries and the US-China trade dispute situation."

Imports from the 1st to the 10th of this month amounted to $13.1 billion, down 7.6% ($1.08 billion) compared to the same period last year. By import item, semiconductors (12.8%), machinery (5.1%), and precision instruments (7.8%) increased, while crude oil (-11.9%), gas (-41.7%), and wireless communication devices (-22.2%) decreased. During this period, imports from China (0.6%) and the EU (4.3%) increased, but imports from the United States (-14.9%), Japan (-15.6%), the Middle East (-37.1%), and Vietnam (-16.1%) decreased.

Professor Choi Nam-seok of the Department of Trade at Jeonbuk National University said, "If the US-China trade conflict intensifies, it will have a direct and indirect impact on exports to China," adding, "In particular, if Samsung Electronics and SK Hynix stop supplying semiconductors to China's Huawei, a decline in export performance will be inevitable." Professor Jung In-kyo of the Department of International Trade at Inha University said, "Although the export decline has significantly narrowed due to the effect of working days, the average daily export value continues to decrease," and predicted, "If foreign countries impose lockdown measures again to curb the spread of COVID-19, it will be even more difficult for exports to rebound."

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