South Korean exports down for 8th straight month in July on global slowdown

02, Aug. 2019

SEOUL, NNA - South Korea’s exports fell for an eighth straight month in July, hit by soft demand for semiconductors, slowing global growth amid the U.S.-China trade dispute and Japan’s restrictions on exports to its neighbor, the Ministry of Trade, Industry and Energy said on Thursday.

Key Points:

―― Exports dropped 11.0 percent from a year earlier to $46.1 billion in July, although the pace of decrease decelerated from 13.7 percent in June.

―― The ministry attributed the decline to factors including the China-U.S. trade dispute; a slowdown in the semiconductor sector and falling chip prices; and a slow recovery in oil prices that is hurting refiners and petrochemical firms, and to a lesser extent, Japan’s export restrictions.

―― “It appears that Japan’s export restrictions had a limited impact on July exports,” the ministry said in a press statement. In early July, Tokyo tightened restrictions on exports to South Korea of key materials used to make memory chips and display panels.

―― Exports of semiconductors, which accounted for 20 percent of total exports, declined by 28.1 percent. “DRAM and NAND prices continued to decline compared to last year despite recent temporary rebounds,” the ministry said. “Inventory adjustments at global companies also contributed to the contraction.”

―― On the upside, exports of automobiles increased 21.6 percent, thanks to growing global demand for SUVs and eco-friendly vehicles.

―― Shipments to China, South Korea’s largest export market, fell 16.3 percent, the ninth straight month of declines. Exports to the United States dipped 0.7 percent and those to Japan edged down 0.3 percent.

―― Imports fell 2.7 percent from a year earlier to $43.7 billion in July, down for the third straight month. Imports from Japan slumped 9.4 percent in July after Japan tightened restrictions of exports of key materials used in chips and display panels to South Korea.

―― South Korea continued to post a trade surplus, which came to $2.4 billion in July.

Takeaway:

―― Trade, Industry and Energy Minister Sung Yun-mo told reporters that the government had a strong sense of urgency about weak exports and would support struggling companies.

―― Japan’s cabinet decided on Friday to revoke South Korea’s preferential status as a trade partner for the purchase of products that could be diverted for military use, raising the stakes in a bitter diplomatic row between the neighbors that includes wartime history as well as trade policy.