South Korea’s exports shrank year-on-year for a second straight month last month on sluggish demand from China and a decline in sales to the recession-hit eurozone, official figures showed yesterday.
However, inflation last month hit a 29-month low, giving the central bank more scope for further monetary expansion if external risks grow for Asia’s fourth-largest economy.
Exports last month fell 4.7 percent year-on year to US$46.3 billion, while imports were down 0.2 percent at US$44.1 billion, leaving a trade surplus of US$2.2 billion, according to preliminary data from the South Korean Ministry of Knowledge Economy.
In March, exports and imports were both down 1.4 percent year-on-year at US$47.38 billion and US$44.93 billion respectively, for a trade surplus of US$2.45 billion.
Exports to the Middle East jumped 35 percent year-on-year last month and rose by 5.6 percent for the US, according to figures compiled over the first 20 days of the month.
However, outbound shipments to largest trading partner China were up just 1.7 percent, and exports to Japan and the EU shrank by 11.3 percent and 16.7 percent respectively.
The government said fewer workdays in the month due to a general election holiday and high year-ago base numbers were partly to blame.
However, in the coming months, the lack of a solution to Europe’s problems, a slowing Chinese economy and a weakening yen would all pose downside risks to South Korean exports, the government said.
Statistics Korea said separately the consumer price index was up 2.5 percent last month from a year earlier, the weakest rise since 2.4 percent in November 2009. It followed a 2.6 percent rise in March.
Month-on-month, the index was unchanged last month compared with a 0.1 percent fall in March.
The government attributed the eased inflation to a fall in the prices of food and industrial goods, including medicine.
Last month’s soft trade figures — along with worse than expected March industrial production data — could threaten the government’s 3.7 percent growth projection for the full year.
“Along with the tepid March output readings, the sets of data [Tuesday] leave little room for a rate hike and put more weight in the direction of further easing,” Hyundai Securities chief economist Lee Sang-jae said.