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(2nd LD) S. Korea's exports down for 6th straight month on slowing global growth

All Headlines 10:42 June 01, 2019

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By Kang Yoon-seung

SEOUL, June 1 (Yonhap) -- South Korea's exports declined by more than expected in May, extending their slump for the sixth consecutive month, data showed Saturday, as the global trade war between the U.S. and China and a drop in chip prices continued to weigh on outbound shipments.

Exports came to US$45.9 billion for May, down 9.7 percent from the $50.68 billion tallied a year earlier, according to the data compiled by the Ministry of Trade, Industry and Energy.

The May decline was sharper than what the market had expected. According to a poll by Yonhap Infomax, the financial arm of Yonhap News Agency, the country's exports were estimated to have dipped by some 7 percent last month compared with a year earlier.

The country's outbound shipments fell 2 percent on-year in April following the 8.3-percent drop in March.

Imports moved down 1.9 percent last month to $43.64 billion, resulting a trade surplus of $2.27 billion.

The reading mark 88 straight months in which the country's exports have exceeded imports.

But the surplus narrowed from $5.13 billion and $4 billion posted in March and April, the data showed.

"The rising uncertainties in the global market, including the escalating trade row between the United States and China along with Brexit, had adverse impacts on the recovery of the country's exports," Industry Minister Sung Yun-mo said in a statement.

The minister, however, painted a rosy picture of exports, saying that exports will recover in the second half of the year, considering the anticipated recovery of chip prices and China's efforts to revitalize its economy.

(2nd LD) S. Korea's exports down for 6th straight month on slowing global growth - 1

Exports of chips, the bellwether for the country's exports, continued to decline last month.

Outbound shipments of chips reached $7.53 billion in May, falling a whopping 30 percent from a year earlier, according to the ministry.

The decrease was attributable to the falling prices of chips and the sluggish demand for smartphones around the globe as well as a base effect.

Shipments of petrochemical products nosedived 16.2 percent over the period to $3.66 billion on the weaker demand from China, the data showed.

In contrast, exports of machines moved up 5 percent to $4.7 billion, with auto exports advancing 13.6 percent to $3.95 billon.

The sound performance of rechargeable batteries, electric cars, and organic light-emitting diode (OLED) displays, also made up for some of the losses caused by chips and petrochemical goods, the data showed.

By region, exports to China, the biggest trading partner for Asia's fourth-largest economy, dipped 20 percent in May from a year earlier.

Exports to the European Union lost 12.6 percent following the slowing economic growth in Germany, the regional organization's top economy.

Outbound shipments to the United States, on the other hand, rose 6 percent on-year in May on the back of increased shipments of automobiles and home appliances. South Korea also sold more textile goods to the world's top economy by gaining a price advantage on China.

The May exports data will add to woes for the economy whose growth momentum is waning.

The economy unexpectedly contracted 0.3 percent in the first quarter of the year from three months earlier, marking the worst performance in a decade, due to a sharper than expected dip in exports and facility investment.

Last month, the Bank of Korea trimmed its growth outlook for the year to 2.5 percent from 2.6 percent, but expected that the economy will gather pace during the second half of the year, which many claim that the bank's economic assessment is too optimistic.

On Friday, the central bank, however, held its key rate steady at 1.75 percent given economic uncertainties. BOK Gov. Lee Ju-yeol said a prolonged U.S.-China trade war will further heighten uncertainty.

colin@yna.co.kr
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