South Korea’s exports rose for the first time in more than a year on semiconductor sales, an increase that might be short-lived as the COVID-19 outbreak takes its toll on world trade.
Exports increased 4.5 percent last month from a year earlier, the South Korean Ministry of Trade Industry and Energy said yesterday.
Economists had forecast a 2.8 percent gain.
The actual flow of goods is likely worse than the headline figure suggests, skewed by the timing of the Lunar New Year holiday, which added three business days to the month this year in many Asian economies, or about an 18 percent increase in work time compared with 2019.
South Korea’s average daily shipments dropped 11.7 percent last month, the report showed.
South Korea is an important bellwether of global tech demand, because it is the biggest producer of the memory chips in everything from computers to smartphones.
South Korean President Moon Jae-in on Tuesday last week called for “extraordinary” steps to shield the nation’s economy against the virus epidemic as the number of domestic cases increase.
South Korean Minister of Finance Hong Nam-ki on Friday said that the government is compiling an extra budget with more than US$5.1 billion in spending aid.
Analysts have slashed projections for the pace of the country’s growth and the Bank of Korea on Thursday said there is now a chance of contraction in the first quarter.
“We’re now seeing tremendous short-term disruption from [South] Korea to Thailand to Italy as companies realize this isn’t only a China issue,” said Nick Vyas from the University of Southern California Marshall School of Business.
The latest data showed that South Korea’s shipments to China dropped 6.6 percent in February from a year earlier, while exports to the US rose 9.9 percent.
Automobile shipments decreased 17 percent, while exports of smartphones and other wireless communication devices rose 8 percent, data showed.
Overall imports rose 1.4 percent from a year earlier, resulting in a trade surplus of US$4.1 billion, data showed.
“Looking ahead, weakened demand from China and disrupted supply chains will likely weigh on overseas sales for the next few months. Should the virus spread further and damp demand from other trade partners, exports would see more downside risk,” said Justin Jimenez, associate economist for Asia at Bloomberg LP.
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