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Exports drop 11.1% in third monthly decline

Mar 02,2019
Korea’s exports, which hit an all-time annual peak of $600 billion last year, fell for the third consecutive month, deepening concerns of a sharp economic slowdown.

The figures were released a day after the central bank froze the key interest rate for the fourth consecutive month after bumping it up 0.25 percentage points to 1.75 percent in November, citing uncertainties.

According to the Ministry of Trade, Industry and Energy, Korea’s export in February fell 11.1 percent compared to the previous year to $39.6 billion. This was a faster drop than January’s 5 percent.

The ministry blamed falling computer chip prices and the slowing of China’s economic growth.

Semiconductor exports in February shrunk 24.8 percent to $6.77 billion, a sharp turnaround from Feb. 2018’s surge of 40 percent. As semiconductor exports have shrunk, computer chips now account for 17 percent of Korea’s overall exports, down from 20 percent for last year as a whole.

The price for 8-gigabyte DRAM chips has plummeted 37 percent compared to a year ago to $5.90 from $9.30. The price for a 128-gigabyte NAND flash chip dropped 25.2 percent from $6.70 to $5.

Semiconductor demand has been falling as global IT companies invest less in data centers and smartphone sales wobble.

Exports of petrochemicals, another key Korean export category, fell 14.3 percent last month. Unit prices have been falling due to an increase in supply of shale gas from the United States and the slowing of China’s economy.

Exports to China, Korea’s largest export market accounting for 26.8 percent of all Korean exports, nosedived 17.4 percent in February. Exports to China have fallen for four consecutive months.

In October, the International Monetary Fund lowered its outlook for China’s growth this year from 6.4 percent - projected last July - to 6.2 percent.

Exports to the EU also fell 8.5 percent. The EU Commission recently adjusted its forecast for EU growth from 1.9 percent to 1.3 percent.

Exports to the United States have been growing for five consecutive months. In February, they grew 16 percent to $5.4 billion.

The Trade Ministry, however, said exports from new growth engine industries have been rising sharply. Biohealth exports grew 24.5 percent year on year in February to $630 million, a surge even when compared to the previous month when they grew 5.6 percent on an annualized basis.

Rechargeable battery exports were up 10.7 percent to $550 million, representing five consecutive months of growth. In January, battery exports grew 6.6 percent.

OLED exports were up 7.9 percent, the fourth consecutive monthly rise, to $620 million.

But electric cars saw the biggest increase surging 92.4 percent to $160 million. That category has enjoyed nearly triple digit growth for three consecutive months. In December and January, EV exports were up more than 200 percent.

Cosmetics was another area that enjoyed strong growth. Cosmetics exports grew 21.5 percent to $470 million, the second consecutive month of growth and five times the 4.6 percent increase enjoyed in January.

Imports fell 12.6 percent last month to $36.5 billion largely due to a decline in semiconductor manufacturing equipment, power generators - as a result of companies cutting back on facilities investments - as well as a decline in imports of crude oil.

The decline in imports helped Korea maintain its longest streak of trade surpluses at 85 consecutive months. The trade surplus in February was $3.1 billion.

“The government has recognized the seriousness of the external export conditions, and since January, with cooperation from other departments, we have been providing all help to export companies,” said Trade Minister Sung Yun-mo. “On March 4, we plan to announce measures that exporters will feel directly.”

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]