June Exports Down 10.9%... From -20% Range to -10% Range After 3 Months (Update)

Ministry of Trade, Industry and Energy Announces 'June Export-Import Trends'
First Two Months in 11 Years with -20% After April-May Financial Crisis
June Decline Narrows to -10% Range
Trade Balance Surplus for Two Consecutive Months
Government-Supported Auto and Petrochemical Sectors Still Lagging
Auto Parts -45%, Automobiles -33.2%, Petrochemicals -11.8%

When will it be revived? (Photo by Yonhap News)

[Asia Economy Reporter Moon Chaeseok] Our exports have yet to fully recover from the impact of the novel coronavirus disease (COVID-19), but the rate of decline has lessened. In April and May, exports fell by more than 20% year-on-year for two consecutive months for the first time since the 2009 financial crisis, but last month the decrease was 10.9%.

According to the 'June Export-Import Trends' released by the Ministry of Trade, Industry and Energy on the 1st, exports last month amounted to $39.21 billion, down 10.9% from the same month last year. Since Memorial Day fell on a Saturday, the number of working days was 23.5, two days more than last year's 21.5 days.

When adjusted for the number of working days, the average daily export value was $1.669 billion, a decrease of 18.5% compared to the same period last year.

Imports were $35.55 billion, down 11.4%. The trade balance recorded a surplus of $3.67 billion. This marks a surplus for two consecutive months, and the surplus amount increased compared to the $440 million surplus recorded in May.

Exports have been declining for four consecutive months. The key question was whether the rate of decline could be reduced to single digits, but this was not achieved. The figures were -0.2% in March, -24.3% in April, -23.7% in May, and -10.9% last month.

This marks the first time in 11 years since July and August 2009, when the decline was -22.1% and -20.9% respectively, that the second half of the year begins with the rate of decline falling below the -20% range for two consecutive months.

The performance of industries heavily supported by the government, such as automobiles, auto parts, and petrochemicals, remained sluggish.

Automobile exports were down 33.2% year-on-year, and auto parts fell by 45%. These industries are receiving full government support for liquidity through financial institutions such as the Korea Trade Insurance Corporation. However, due to the nature of the products, the trend in performance needs to be monitored further.

Petrochemicals also declined by 11.8%. Although oil prices have risen, the sector has not yet recovered from its slump.

An official from the Ministry of Trade, Industry and Energy explained, "While the impact of COVID-19 continues, the export decline rate this month narrowed from the -20% range to the -10% range for the first time in three months. Although major items continue to see export decreases, the rate of decline for items that were severely affected last month has somewhat lessened."

Export performance in major markets was also not very favorable. The United States saw an 8.3% decrease year-on-year, the European Union (EU) declined by 17%, and the Association of Southeast Asian Nations (ASEAN) fell by 10.8%. The good news is that China, the largest export destination accounting for about a quarter of our exports, increased by 9.5%.