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Korea Trade March 2020

Korea: Exports year-on-year tick down in March, despite hitting an 11-month high

Merchandise exports decreased 0.2% year-on-year in March, contrasting the 4.3% rise recorded in February, totaling USD 46.9 billion in March (February: USD 41.2 billion). Meanwhile, merchandise imports edged down 0.3% in March, after rising 1.6% in February, and totaled USD 41.9 billion (February: USD 37.2 billion).

The merchandise trade surplus increased from USD 4.0 billion in February to USD 5.0 billion in March (March 2019: USD 5.0 billion surplus). Meanwhile, the 12-month moving sum of the trade balance was unchanged at USD 39.7 billion surplus in March.

March’s slight fall in exports was mainly due to Covid-19 weighing on demand, but also a tough base effect. Semiconductor exports were down year-on-year—due to a notably fall in smartphone sales likely from Covid-19—but remained relatively upbeat in key markets such as Europe, Japan and the U.S. Surprisingly, exports of automobiles were up in March, despite soft global demand, as SUV exports to North America and sales of eco-friendly vehicles to Europe drove sales over the past month.

Looking ahead, exports are still expected to hold up relatively well this year, as essential industries abroad keep foreign demand afloat. Moreover, fiscal stimulus around the world should support a smooth transition back to work once the pandemic subsides, which should benefit demand for Korean goods.

Commenting on March’s result, analysts at Goldman Sachs, noted:

“The gain in per-day exports during the last 11 days of March was significantly weaker than usual intra-monthly patterns (daily exports during last 11 days rose +13% vs. daily exports during first 20 days of the month, compared with 26% average gains in past 12 months). Such weakness could be an early indicator of further deterioration in the following month as demand-side headwinds from the US and Europe materialize.”

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