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Korea’s May exports decrease 9.4% to $45.9 billion 2019-06-03

The Ministry of Trade, Industry and Energy announced on June 1 that Korea’s exports in May decreased 9.4 percent to USD 45.9 billion compared to the same period a year earlier. Imports fell 1.9 percent to $43.6 billion, resulting in a trade surplus of $2.3 billion.
The slowdown in exports was mostly due to an intensifying U.S.-China trade dispute, a sluggish semiconductor industry, and a slowing Chinese economy. Exports in volume terms, however, inched up 0.7 percent, continuing to grow for two consecutive months. This suggests that the decline was largely a result of lower prices of export goods.

Against this backdrop, Trade, Industry and Energy Minister Sung Yun-mo said the Korean government will gradually develop measures by the end of this year to revamp its export structure. These measures will be aimed at diversifying export items and markets, increasing the number of exporters, and shaping the infrastructure for digital trade. Minister Sung added that exports are expected to improve in the second half of the year in anticipation of semiconductor price recovery and oil price stabilization, as well as other factors.

Among Korea’s 20 major export items, five saw improvement: general machinery, automobiles, ships, plastic products, and secondary batteries. The remaining 15 items experienced decreases: semiconductors, petrochemicals, petroleum products, steels, auto parts, displays, textiles, wireless communication devices, agricultural products and fisheries, bio-health products, computers, fine chemical materials, home appliances, cosmetics, and robots.

By item, automobiles gained 13.6 percent to $4 billion. Despite decreased demand in the EU, auto exports advanced because of increased shipments of sports utility vehicles (SUVs) and eco-friendly cars.

Ships jumped 44.5 percent to $1.2 billion due to improved shipments of liquefied natural gas (LNG) carriers and very large crude carriers (VLCCs). Ships ordered in 2017 started to be delivered from March this year.

Meanwhile, semiconductors fell 30.5 percent to $7.5 billion. This is attributable to continuously falling prices, inventory adjustments in data centers, stagnant demand for smartphones, and a base effect.

Petrochemicals also dropped 16.2 percent to $3.6 billion. While their export volume increased following the operation of newly added facilities, lower Chinese demand and declining prices contributed to the contraction.

By region, exports to the Commonwealth of Independent States (CIS) and India increased while those to China and the Association of Southeast Asian Nations (ASEAN) decreased.

Exports to the CIS amounted to $1.2 billion, up by 38.8 percent. Increases were seen in general machinery, automobiles, petrochemicals, and home appliances.

Those to India also went up 3.6 percent to $1.4 billion primarily because of enhanced sales of semiconductors, textiles, and home appliances.

Shipments to the China, on the other hand, moved down 20.1 percent to $11.1 billion, following sluggish exports of semiconductors, petroleum products, displays, and computers. A base effect was also partly responsible for the decline.

Those to ASEAN slipped 4 percent to $7.6 billion mainly because of lower sales of semiconductors, steel products, textiles, and petrochemicals.

For imports, the decrease was led by crude oil (down 10.8 percent), semiconductor manufacturing equipment (down 62.5 percent), and gasoline passenger vehicles (down 22.3 percent).

* Short version