SEOUL (Reuters) – South Korean exports tumbled in May for the third straight month, though at a slower pace, as extended global lockdown measures to contain the wider spread of the coronavirus weighed on worldwide demand.
Shipments contracted 23.7% year-on-year in May, trade ministry data showed on Monday, slower than a 25.1% drop in April but worse than a 22.1% plunge tipped in a Reuters survey.
The average exports per working day, excluding the calendar effect, fell 18.4%, compared with a 18.3% fall seen in the previous month.
South Korea’s monthly trade data, the first to be reported among major exporting economies, provides an early guide to the health of global trade.
“Exports will remain sluggish until the start of third quarter as global COVID-19 disruption and weak sentiment are expected to persist for sometime,” said Chang Jae-chul, an economist at KB Securities.
“The U.S.-China tension over Hong Kong could also take a heavy toll on exports … If the United States impose tariffs on Hong Kong just like on China, there would be further impact on global demand and that could pose a huge downside risk globally,” he added.
Monday’s data showed overseas sales of semiconductors, the nation’s top export item, rose 7.1% from a year earlier, but per-day exports of that jumped 14.5% on-year.
Meanwhile, imports plunged 21.1%, far worse than a 15.8% drop in April and a prediction of 17.9% fall. That resulted in a $0.44 billion trade surplus, after April’s $1.39 billion deficit, which was the first trade gap since January 2012.
South Korean government has pledged stimulus totalling about 245 trillion won to tackle the economic slowdown. It will unveil its third supplementary budget proposal in early June.
The Bank of Korea downgraded its 2020 growth projection to a 0.2% decline as it cut its policy rate <KROCRT=ECI> to a record-low of 0.50% on Thursday after an emergency 50 basis point cut in mid-March.
(Editing by Sam Holmes)