South Korean exports took another hit last month, highlighting ongoing weakness in tech demand and the economy’s acute sensitivity to international trade tensions.
Exports fell 13.5 percent from a year earlier, falling for a seventh straight month, data from the Korea Customs Service and the South Korean Ministry of Trade, Industry and Energy showed yesterday.
The decline was largely in line with economists’ estimates.
Last month’s data offer the first full-month trade figures since the US-China trade war escalated in May. While the restarting of talks announced at the weekend during the G20 summit in Japan offers hope of an eventual deal between the world’s top two economies, analysts said the future still looks uncertain for South Korean exporters.
Seoul’s reliance on the US and China as its two biggest export markets makes it vulnerable to the ongoing trade war. About a quarter of South Korean exports go to China, with many of them used to produce final goods that are shipped on to other countries, including the US.
The latest data showed exports to China fell 24.1 percent, while those to the US dipped 2.5 percent.
Semiconductor shipments declined 25.5 percent, petrochemicals slumped 24.5 percent, while automobile shipments increased 8.1 percent and exports of ships rose 46.4 percent, data showed.
Bank of Korea Deputy Governor Yoon Myun-shik told reporters that the US-China truce was positive for sentiment and that South Korea’s semiconductor industry was likely to rebound.
“The agreement at the G20 was only a truce and there’s still the persisting question of whether demand is recovering fundamentally,” KB Securities Co economist Kim Doo-un said.
Relations between the two sides would continue to be shaky and the agreement to keep talking would only have a limited effect on exports, he added.
Imports declined 11.1 percent last month from a year earlier, leaving a trade surplus of US$4.17 billion, the latest data showed.
Separately, Japan’s decision to tighten curbs on tech material exports to South Korea, which is to take effect on Thursday, violates WTO rules and Seoul would respond firmly, a senior official at the South Korean trade ministry said.
The new measures would significantly slow the export of several key materials used by South Korea’s chip and smartphone giants and the Japanese Ministry of Economy, Trade and Industry said they were the result of a breakdown in trust with Seoul.
The new restrictions apply to three chemicals as well as the transfer of manufacturing technologies, removing them from a list that effectively allowed expedited export.
It means that exporters would now have to apply for permission for each batch they wish to export to South Korea, a process that takes about 90 days each time, Japanese media reported.
“This export control measure by Japan is a measure that is banned in principle according to WTO agreements,” South Korean senior trade ministry official Park Tae-sung told reporters.
The South Korean Ministry of Foreign Affairs said Vice Minister Cho Sei-young had also summoned Japanese Ambassador to Seoul Yasumasa Nakamine to demand that Japan withdraw the restrictions.
The ministry said Cho told Nakamine that the controls could hurt South Korea’s industry and bilateral relations.
Additional reporting by Reuters and AFP
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