Korea: Merchandise exports fall at a quicker pace in April
Merchandise exports plummeted 14.2% year on year in April, slightly worse than market expectations and on the heels of March’s 13.6% plunge. Meanwhile, merchandise imports dived 13.4% over the same month last year in April (March: -6.2% yoy), marking the weakest reading since August 2020.
As a result, the merchandise trade balance improved from the previous month, recording a USD 2.6 billion deficit in April (March 2023: USD 4.6 billion deficit; April 2022: USD 2.5 billion deficit). Lastly, the trend pointed down, with the 12-month trailing merchandise trade balance recording a USD 65.9 billion deficit in April, compared to the USD 65.8 billion deficit in March.
Part of the reason exports declined so much in year-on-year terms is purely statistical: There were fewer working days in April 2023 than in April 2022, and there was a high base effect created by a surge in exports in April 2022. That said, even taking this into account, exports remained weak in April amid a continued slump in semiconductor exports. Exports to China continued to decline despite the country reopening from Covid-19. 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 the export growth downturn to continue into Q2, due to slowing chip demand. However, past cycles suggest the chip cycle downturn is nearing its end, and could possibly bottom in late Q2.”