South Korea’s exports dip despite solid chip demand

SEOUL: South Korean exports slipped in March as the coronavirus ravaged the global economy and supply chains although solid chip demand provided a rare bright spot as lockdowns across the world forced millions to use telecommuting technology.

Exports slid 0.2% year-on-year in March, trade ministry data showed on Wednesday, missing a 1.5% gain tipped in a Reuters poll and far worse than a 4.3% rise in the previous month.

The average exports per working day, excluding the calendar effect, however, tumbled 6.4%, compared with an 11.9% contraction seen in February.

Asia’s fourth-largest economy is considered a bellwether for world trade and is the first major exporting economy to release monthly trade data.

Semiconductors, a major export, fell 2.7% in value terms, though that jumped 27.0% in volume on surging demand due to a boom in telecommuting as the coronavirus pandemic kept millions worldwide confined to their homes.

“Demand for solid-state drives (SSD), a storage device, saw a serious boost with more people working from home, which made overall exports figures look better,” a trade ministry official said.

“Surging demand for laptops and SSDS is counted as part of computer exports, which saw an 82.3% surge. But we expect shipment data to worsen in April as more and more countries undergoing hardship from the outbreak to weaken global demand,” the official added.

Exports to China fell 5.8% year-on-year, but those to the United States and the European Union rose 17.3% and 10.0%, respectively, with the virus impact not fully reflected in the data, the ministry said.

Disrupted factory production and business operations paralysed economic growth and demand globally. A growing number of analysts expect South Korea’s economy to shrink this year, with Nomura now seeing a 6.7% contraction.

“Shutdowns in productions are seen in many advanced economies, while country lockdowns are also making it hard for global trade to make a breakthrough,” Hi Investment & Securities chief economist Park Sang-hyun said.

Nearly 800,000 people have been infected across the world and around 39,000 have died, according to a Reuters tally. South Korea’s nationwide infections are just below 10,000, making it the largest outbreak in Asia outside China.