Korea: Merchandise exports continue to slump in May
Merchandise exports dived 15.2% over the same month last year in May, following April’s 14.3% decline. Meanwhile, merchandise imports dropped 14.0% year on year in May (April: -13.3% yoy), marking the weakest result since August 2020.
Nevertheless, the merchandise trade balance improved from the previous month, recording a USD 2.1 billion deficit in May (April 2023: USD 2.7 billion deficit; May 2022: USD 1.6 billion deficit). Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 66.7 billion deficit in May, compared to the USD 66.2 billion deficit in April.
Part of the reason for the decline was statistical, as there were fewer working days in May 2023 than in May 2022. Adjusting for this, the decline in exports was less severe in May than in April. That said, the decline remained in double digits amid a continued slump in the semiconductor sector. Exports to China tanked further despite the country reopening from Covid-19 earlier this year. More positively, automobile shipments continued to rise sharply again due to the recent easing of supply bottlenecks.
Nomura’s Jeong Woo Park said:
“We expect export growth to remain negative throughout H2, even though the bottom of the export cycle appears to be around the corner. In our view, two contrasting factors are at play. While chip supply-side conditions are set to improve in coming months, helping to stabilize chip prices, slowing global demand will likely continue to weigh on overall exports.”