South Korea’s export slump eased in April, offering a sign that weakness in global demand may be starting to turn a corner.
(Bloomberg) — South Korea’s export slump eased in April, offering a sign that weakness in global demand may be starting to turn a corner.
Shipments adjusted for working-day differences fell 10.4% from a year earlier, the smallest decline since December, according to figures released Monday by the customs office.
Exports to Europe rose and the drop in shipments to China narrowed, signaling the possibility of a turnaround in trade momentum, though tech exports continued to disappoint.
Korean exports serve as a barometer of international trade as the nation sells items such as chips, displays and refined oil, which straddle supply lines. The country is home to some of the world’s biggest semiconductor and smartphone makers including Samsung Electronics Co. and SK Hynix Inc., whose dismal first quarter earnings highlight ongoing struggles in the global technology sector.
The release showed that headline exports fell 14.2%, exceeding economists’ expectations for a 12.2% decline, with the figure dragged down by one fewer working day in the month compared with April a year earlier. Overall imports fell 13.3%, resulting in a trade deficit of $2.62 billion, the smallest shortfall in 10 months.
Trade is a key component of Korea’s economy as the country relies heavily on global commerce to generate growth. The economy grew a marginal 0.3% in the first three months of the year from the prior quarter, avoiding a technical recession but underscoring the hit to exports.
The won has also been a victim of weak trade. The Korean currency has fallen more than 5% against the dollar this year, lagging far behind all its Asian peers.
Bank of Korea Governor Rhee Chang-yong has flagged uncertainties for the economy, including US banking sector turmoil, a fragile local housing market and tensions between Washington and Beijing. Economists and tech sector executives expect a rebound in semiconductor sales and prices in the latter half of the year.
Among the biggest gainers from a year earlier was the value of automobile shipments, which rose just over 40%. Ship exports also soared by close to 60%, a possible one-off jump that may have inflated the numbers favorably.
Shipments to the Europe gained 9.9% in April from a year earlier, while exports to China fell 26.5%, compared with a drop of around a third in March. Exports to the US dropped 4.4%.
Exports of chips dropped 41% in April from the prior-year period after sliding 34.5% in March, pointing to ongoing anemic global tech sector demand. Overseas shipments of displays fell by almost 30%.
(Adds more details from release)
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