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Trade surplus stopped after 99 months
17 of the top 20 items last month … Ships, oil and auto parts fell significantly
Biocomputers are growing rapidly … Government “It is not a deficit with the recession”
The global crown pandemic19 has begun to seriously harm the Korean economy, which has been heavily dependent on exports since last month. Exports are falling regardless of region and item, as external factors such as low oil price shocks overlap with the United States’ ‘block’ (national blockade) and ‘closure’ (factory closure) and the European Union. It is so serious that a senior government official said: “The crisis of the unfinished financial crisis, the infectious disease crisis and the low oil price crisis.” However, it did not reach the “recession-type deficit”, accompanied by a slowdown in domestic demand.
If we look at the “Import and Export Trends in April 2020” announced by the Ministry of Commerce, Industry and Energy on January 1, Korea’s exports declined last month in all regions of the world. First, exports to China fell 17.9% year-on-year, showing a decline for the fourth consecutive month. Exports to the United States and the EU also decreased by 13.5% and 12.8%, respectively.
In particular, exports to the EU remained at the lowest daily average of $ 200 million this year, due to the contraction in demand from European countries and a decrease in demand and lower production. The total amount of supplies to the nations of Southeast Asia (-32.9%), the Middle East (-20.7%) and Latin America (-54.2%) also plummeted. As a result, exports last month amounted to $ 3,693 million, 24.3% less than in the same period last year.
Per item, 17 of the top 20 export items decreased. Shipbuilding (-60.9%) had the biggest decrease, and the main ship owners stopped working earlier. Exports of petroleum products also fell 56.8%. The fall in export prices due to the fall in international oil prices and the downward impact of the use of refinery capacity. Suspension of plant closings by automakers caused delays in exports of auto parts (-49.6%) and sporting events such as the Tokyo Olympics (-20.0%).
Small and medium-sized businesses that are vulnerable to external shocks are bankrupt. Although the government is taking action, it is unclear whether the shock will be offset because export conditions will not improve. Industry and Energy Minister Seongyun-Mo said: “We will provide 36 billion won worth of export financing in time to address the shortage of exports that businesses need most, so that we can focus on exports.”
The government believes that the trade deficit that occurred in 99 months is not a “recession-like deficit”. During the global financial crisis in January 2009, imports of capital goods (-31.3%) and intermediate goods (-28.2%) decreased dramatically, which also affected production and investment, resulting in slow exports by tenth consecutive month. However, this time, as the domestic manufacturing industry operates normally, capital goods and intermediate goods are constantly imported. It is also encouraging that China’s economy, the largest source of exports, is recovering.
The increase in global demand for KD and KDigital is a new factor of opportunity. Exports of bio-health increased 29.0% YoY as products from Korea, a model country for prevention, sold well. As of this year, the corona19 diagnostic kit, which was counted in export statistics, has increased dramatically from $ 3,400 in January to $ 643,000 in February, $ 24,101,000 in March, and $ 2,234,000 in April. Computer exports increased 99.3% during the same period due to the spread of teleworking.
Strategy and Finance Minister Kim Yong-beom said at the ‘VIII Innovative Growth Strategy Inspection Meeting’ held at the Seoul Government Complex the same day: “The rapid decline in exports may further increase the burden on Korean companies struggling with Corona 19. ” “We will closely monitor import and export trends, focusing on responding to the industry and business crisis in the Central Economic Strategy Division.”
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