S. Korea’s exports down for 7th month in April on falling chip demand

May 1, 2023

South Korea’s exports fell for the seventh consecutive month in April due mainly to sagging global demand for semiconductors amid an economic slowdown, the industry ministry said Monday.

Outbound shipments fell 14.2 percent on-year to US$49.6 billion last month, according to the data compiled by the Ministry of Trade, Industry and Energy.

The decline came as exports of semiconductors, the country’s key export item, sank 41 percent on-year on falling demand and a drop in chip prices.

Fewer working days and a high base effect were also behind the fall in exports last month, as exports hit the largest figure of $57.8 billion for any April last year.

Exports have logged an on-year fall since October last year amid aggressive monetary tightening by major economies to curb inflation and an economic slowdown. It is also the first time since 2020 that exports have declined for seven months in a row.

Imports fell 13.3 percent on-year to $52.2 billion in April, as the country’s energy imports went down 25.8 percent on-year, the ministry said. South Korea depends on imports for most of its energy needs.

Accordingly, the country suffered a trade deficit of $2.6 billion last month.

Imports have exceeded exports in South Korea since April last year on high energy prices, and it is the first time since 1997 that the country has logged a trade deficit for 14 months in a row.

But the monthly trade deficit has been reduced this month from $12.52 billion in January to $5.3 billion in February and further to $4.63 billion in March, the data showed.

This file photo taken April 2, 2023, shows a port in the southeastern city of Busan. (Yonhap)
This file photo taken April 2, 2023, shows a port in the southeastern city of Busan. (Yonhap)

In detail, semiconductor exports came to $6.38 billion in April, an on-year drop from $10.78 billion. The country’s chip exports have logged an on-year decline since August last year.

Exports of petrochemicals dropped 23.8 percent to $3.81 billion, and those of petroleum products lost 27.3 percent to $3.76 billion last month on falling global oil prices.

Cheaper global prices of steel products also brought down South Korea’s steel exports by 10.7 percent to $3 billion last month, the ministry said.

Global sales of South Korean display items also slid 29.3 percent to $1.23 billion, and those of bio-health items decreased 18.3 percent to $1.03 billion in April.

Outbound shipments of secondary batteries logged a 4.4 percent fall to $780 million.

But car exports spiked 40.3 percent on-year to $6.16 billion last month, which has shown an on-year growth for the past 10 months in a row.

Exports of vessels also surged 59.2 percent to $1.62 billion, and those of machinery grew 8.1 percent on-year to $4.65 billion, the data showed.

By nation, exports to China, South Korea’s No. 1 trading partner, tumbled 26.5 percent to $9.52 billion last month, extending the losing streak to the 11th month. The decrease came amid China’s sagging demand for chips, among other items, the ministry said.

South Korea saw a $2.27 billion deficit in trade with China, extending its shortfall to seven months in a row.

Shipments to the Association of Southeast Asian Nations (ASEAN) skidded 26.3 percent to $8.3 billion in April, as South Korea’s exports with Vietnam, the top trading partner among ASEAN countries, reported a marked decline.

ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam.

Exports to the United States marked a 4.4 percent fall to $9.18 billion last month due to a high base effect, according to the ministry.

But exports to the European Union rose 9.9 percent to $6.09 billion and those to the Middle Eastern nations jumped 30.7 percent to $1.65 billion last month, it added.

“We’ve experienced difficulties in trade amid the delay in a global economic recovery and the weak global demand for semiconductors,” Industry Minister Lee Chang-yang said.

“The government will come up with more tailored measures to prop up exports of key items. In a longer-term perspective, we will make an investment in chips, batteries and other advanced industries to secure technology prowess and to create new industry complexes to nurture next-generation sectors,” he added.