[Asia Economy Reporter Moon Chaeseok] South Korea's exports in August started with a double-digit decline. There are opinions that our exports may not escape the impact of the novel coronavirus disease (COVID-19) in the third quarter as well.
According to the export-import status (customs clearance provisional figures) for August 1-10 announced by the Korea Customs Service on the 11th, exports during this period amounted to $8.7 billion, down 23.6% compared to the same period last year. Imports during the same period were $10.6 billion, down 24.3% ($3.42 billion) compared to the same period last year. The trade balance showed a deficit of $1.91 billion.
The number of working days during this period was 7, one day less than last year. Considering the number of working days, the average daily export amount was $1.25 billion, down 12.7% compared to the same period last year.
Looking at major export items, computer peripherals increased by 62.3% compared to the same period last year, while semiconductors (-6.8%), petroleum products (-45.8%), and wireless communication devices (-43.6%) decreased.
By country, it is also notable that the performance of South Korea's three major export markets?China, the United States, and the European Union (EU)?all worsened. China recorded -11.3%, the US -22.3%, and the EU -13.9%. In addition, Vietnam (-23.5%), Japan (-27.8%), and the Middle East (-51.2%) also declined consecutively.
According to the government and academia, the possibility of export performance rebounding this month is not high. Looking at this month alone, the number of working days is 23, 1.5 days fewer than the same period last year.
August is a vacation season, so export performance is often poor, but this year, with the combination of heavy rains and COVID-19, there is a possibility of long-term shutdowns by industry. This could affect industries where order performance is important, such as shipbuilding.
Shin Yong-min, Director of the Export-Import Division at the Ministry of Trade, Industry and Energy, said, "Since the number of working days this month is 1.5 days less than last year, it is difficult to predict whether we can maintain a single-digit negative growth following last year's -7%," but added, "Semiconductors are performing well among ICT industries, and the decrease rate in China, a major export market, is lower than in other countries."
Experts say that the impact of the government's 'K-Service Overseas Expansion Activation Plan,' to be announced on the 13th, on ICT export performance should be closely watched. The government plans to announce measures to develop content, edutech, digital services, fintech, and engineering as six promising 'K-Services' and promote them as key export industries at the 13th Emergency Economic Central Countermeasures Headquarters meeting chaired by Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki.
Kang In-su, Professor of Economics at Sookmyung Women's University, said, "Since some ICT sectors such as 5G may surge, we need to observe the trend until the end of the month," but also diagnosed, "Considering the trade dispute with the US and the virus impact in some regions, the recovery of exports to China may be slower than expected."
Jung In-kyo, Professor of International Trade at Inha University, said, "Although the US is unlikely to impose a full economic lockdown due to the presidential election, there are many variables until the end of the year, and the spread of COVID-19 is not decreasing, so export uncertainty remains high," and added, "Since the bottom was hit in the second quarter, we need to be cautious about the optimistic assumption that the third quarter will be better."
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