South Korean exports fell at a sharper pace in April as fewer working days ate into shipments already suffering from weak global demand and low global commodity prices, and the trade ministry said it was not optimistic about conditions in May.
Preliminary data showed April exports slid 11.2% from a year earlier, while imports dropped a faster 14.9%, the Ministry of Trade, Industry and Energy said on Sunday. Both figures were worse than economists had expected, Reuters reported.
Exports from Asia’s fourth-largest economy have been falling since January last year, and declined 8.1% in March, while imports dropped 13.9% then.
April’s trade surplus stood at $8.84 billion, down from a $9.86 billion surplus for March.
May exports are likely to show similar weakness, as downside risks are growing, the ministry said.
The International Monetary Fund cut its world growth forecast to 3.2% from 3.4% in April while the World Trade Organization also slashed its global trade volume growth forecast to 2.8% from 3.9%.
Economists polled by Reuters had forecast South Korea’s exports to fall 11% last month. Imports had been expected to drop 12.5%.
Oil Price Factor
“It’s unlikely we’ll see a sharp rebound anytime soon. Much of this depends on oil prices and if oil climbs over $40 to $50 a barrel towards year-end we might see this slump ease,” said Stephen Lee, economist at Samsung Securities in Seoul.
“If April inflation is weaker than expected, the Bank of Korea will feel the heat to cut rates soon.”
April inflation data will be released on May 3.
Lee said the central bank may lower interest rates from the current 1.50% possibly mid-year to coordinate policy if the government announces more stimulus then.
Shipments to China and the US fell more sharply in April, with those to China dropping 18.4%, the worst fall in three months. Exports of steel, cars and machinery all saw deep declines, slumping 17.4%, 18.3% and 15.6%, respectively.
Offsetting some of the weakness, ship exports jumped 25.2% in April on-year and smartphone shipments rose 3.2% over the same period.
The ministry said 1.5 fewer working days in April this year due to an election hurt exports, but the average export value per working day was $1.82 billion in April, the highest since November last year, the ministry said.
Exports in volume terms also rose 5.5% in April from a year ago, rebounding from a 1.9% fall in March.
