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South Korea's exports fall for sixth month but demand seen picking up

08/31/2020 | 09:19pm EST
FILE PHOTO: A truck drives between shipping containers at a container terminal at Incheon port in Incheon

South Korean exports fell for a sixth straight month in August, mainly due to fewer working days, but global demand is starting to pick up thanks to easing lockdown measures in key trading partners.

Outbound shipments tumbled 9.9% in August from a year earlier, government data showed, faster than July's 7.1% fall but slower than an 11.5% decline tipped in a Reuters survey.

Excluding the calendar effect, per-day exports slid 3.8%, the smallest decline in seven months.

South Korea is the first major exporting economy to report monthly trade data, providing an early guide to the health of global shipments.

"Exports will continue to recover during the second half and turn positive next year," said Chun Kyu-yeon, economist at Hana Financial Investment.

"Global demand are clearly showing recovery along with economic resumptions," she added.

Per-day exports to China, South Korea's biggest trading partner, rose 3.6% year-on-year, while those to the United States and the European Union also jumped 6.4% and 4.1%, respectively.

Exports to China, South Korea's biggest trading partner, fell 3.0% from a year earlier, but rose 3.6% on a per working day basis. Per-day exports to the United States and the European Union also jumped 6.4% and 4.1%, respectively.

Overseas sales of semiconductors, the nation's top exporting item, climbed 2.8%, while those of computers and home appliances surged 106.6% and 14.9%, respectively.

Imports dropped 16.3%, sharper than the previous month's 11.6% and the forecast 15.2% fall, resulting in a $4.12 billion trade surplus.

Tuesday's data comes as the country faces a second wave of coronavirus infections, recording a 19th straight day of triple-digit infections despite tighter social-distancing rules.

Many corporations, including tech giants Samsung Electronics, LG Electronics and SK Hynix, have expanded or reinstated work-from-home policies.

That may dampen the recovery momentum in the economy that already slipped into recession in the second quarter, despite some 277 trillion won (174.48 billion pounds)of stimulus.

The central bank last week sharply downgraded its economic projection, expecting gross domestic product to shrink 1.3% this year - the biggest fall in more than two decades.

"If the social distancing rules are raised to the (toughest) phase 3, leading to factory suspension or disruption in output, that could probably affect exports," Chun said.

By Joori Roh

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
HANA FINANCIAL GROUP INC. -2.80% 38150 End-of-day quote.10.58%
LG CORP. -2.30% 106000 End-of-day quote.21.14%
LG ELECTRONICS INC. -4.76% 140000 End-of-day quote.3.70%
SAMSUNG ELECTRONICS CO., LTD. -1.90% 88000 End-of-day quote.8.64%
SK HYNIX, INC. -2.30% 127500 End-of-day quote.7.59%
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