Korea: Exports and imports freefall in February
Merchandise exports fell 11.1% year-on-year in February—a more pronounced drop than January’s revised 5.9% fall (previously reported: -5.8% year-on-year)—to total USD 39.6 billion. Merchandise imports decreased 12.6% in February—a deterioration from January’s 1.7% fall—and totaled USD 36.5 billion. This latest outturn is indicative of sluggish global trade and ebbing domestic demand momentum; exports have not fallen by this magnitude since February 2016, nor have imports since April 2016.
The merchandise trade surplus widened slightly to USD 3.1 billion from USD 2.8 billion in the same month a year earlier (January: USD 1.3 billion surplus). The 12-month moving sum of the trade balance widened somewhat to a USD 67.8 billion surplus in February from the USD 67.5 billion surplus in January.
Moderating global economic momentum should limit the external sector’s performance this year, while further tariff escalations between the United States and China also pose a risk to Korea’s exports due its location in the supply chain. Moreover, although Korea’s revised trade deal with the U.S. came into force on 1 January, this vital bilateral trade channel could be hit if the U.S. decides to impose a global additional tariff on automobile imports following the conclusion of its ongoing investigation into whether vehicle imports threaten national security.