Fri, Feb 22, 2019 - Page 10 News List

Asia’s export drop signals trade pain not over


Key exporters Japan and South Korea provided fresh evidence over the past two days that the slump in global trade has further to run, and is beginning to spread to factories.

South Korea’s total exports tumbled by 12 percent during the first 20 days of this month, while shipments of semiconductors, a key driver of growth, dropped by 27 percent. A day earlier, Japan reported that exports fell 8.4 percent in January from a year earlier, the first back-to-back fall in more than two years.

One common denominator was that both countries’ shipments to China fell sharply, as that nation’s cooling economy, the US-China trade spat, and a slowing of the global technology cycle all take a toll on world trade.

Declining activity at ports in Hong Kong and Singapore, two of the world’s busiest, also demonstrate the effect of weaker demand for Chinese goods.

Japan’s exports to China dropped 17 percent last month, while South Korea’s fell 14 percent in the first 20 days of this month. The shipments to China were likely distorted at least somewhat by the Lunar New Year holiday, but the slump is in line with the longer-term trend.

The slowing of trade is hurting Japan’s factory sector, with manufacturing activity contracting this month for the first time in two-and-a-half years, preliminary data released yesterday showed.

Net exports were already a drag on GDP growth during the fourth quarter, data released last week showed.

In South Korea, external factors, including the trade spat and semiconductor cycle are the backdrop for a correction in business investment, the South Korean Ministry of Economy and Finance said in its monthly economic assessment last week.

South Korean exports are likely to drop further in the second quarter as chip prices continue to slide, said Stephen Lee, an economist at Meritz Securities Co in Seoul.

Exports fell 5.8 percent for the whole of last month.

The Bank of Korea said in a report to parliament last week that the prolonged trade spat is hurting South Korea as well as the US and China, and it would put significant pressure on global trade and South Korean exports if it worsens.

Trade talks between the US and China are continuing this week in Washington and are scheduled to run through tomorrow.

While the slowdown in China is expected to deepen in the first quarter, analysts are seeing signs of stabilization after that as government support measures kick in.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top