South Korea Exports Dip for Sixth Month as Chip Woes Persist
South Korea Exports Slide for Sixth Month as Global Growth Slows
(Bloomberg) -- South Korea’s exports fell for a sixth straight month in May as slowing global growth and a downturn in the semiconductor industry continue to take a toll on Asia’s fourth-largest economy, a bellwether for global trade.
Shipments fell 9.4% in May from a year earlier, compared with a median forecast of economists for a 6.6% decline. Semiconductor exports, which Samsung Electronics Co. and SK Hynix Inc. lead, dropped 30.5%, according to a statement from the trade ministry.
The deepening U.S.-China trade war and Brexit uncertainties have had a “negative influence” on South Korea’s exports that have been on the path of recovery since February, Minister of Trade Sung Yun-mo said in the release.
Key Insights
- South Korea releases its export data earlier than most other major economies, making it a closely watched indicator of global trade.
- Exports account for about half of Korea’s economy, and semiconductors for about a quarter of its exports, so a prolonged slide in chip demand and prices has hit growth. The economy unexpectedly shrank in the first quarter.
- Bank of Korea Governor Lee Ju-yeol said Friday that exports are expected to recover from the second half of the year, yet cited growing concerns about a prolonged U.S.-China trade war as heightening uncertainty.
- NH Investment & Securities economist An Ki-tae said in a recent report that he expects Korean exports to fall 2.5% this year after rising 5.4% in 2018, with a rebound in the semiconductor industry expected to be delayed until after the third quarter.
What Bloomberg’s Economists Say
Dan Hanson and Tom Orlik: “The U.S.–China trade war has entered a dangerous new phase. Among other major economies, some of the biggest losers would be Singapore, Hong Kong and South Korea, which would see GDP lower by 0.4%, 0.3% and 0.2% relative to a baseline of no escalation.”
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- Imports fell 1.9% in May, compared with a 0.5% gain forecast by economists.
- The trade balance was a surplus of $2.27 billion, compared with expectations for a $2.49 billion surplus.
To contact the reporters on this story: Jungah Lee in Seoul at jlee1361@bloomberg.net;Sam Kim in Seoul at skim609@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, ;Shamim Adam at sadam2@bloomberg.net, Stanley James, Teo Chian Wei
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