Export slump extends to 6th month; chips cushion virus fallout

South Korea's exports extended their slump to a sixth month in August as the resurgence of the new coronavirus around the globe continued to strain business activities, data showed Tuesday. But the retreat was in the single digits on a recovery in shipments of chips.

Outbound shipments came to $39.6 billion last month, down 9.9 percent from $44 billion posted a year earlier, according to the data compiled by the Ministry of Trade, Industry and Energy.

The latest figures were slightly better than what the market had expected. According to a poll by Yonhap Infomax, the financial arm of Yonhap News Agency, the country's August exports were expected to have dipped 12 percent on-year.

Imports shed 16.3 percent to $35.5 billion, resulting in a trade surplus of $4.12 billion. The country snapped its 98 straight months of having more exports than imports in April, before rebounding to the black in May.

On a daily basis, exports decreased at a smaller margin of 3.8 percent, as August had fewer working days compared with the previous year.

"South Korea's exports had hit the nadir in April due to the COVID-19 pandemic. But since then, the country's outbound shipments have been recovering gradually," an official from the ministry said. "It is still, however, uncertain when exports will rebound."

By segment, overseas sales of chips, the mainstay export product, advanced 2.8 percent on-year in August to $8.2 billion, extending their gains to two months on the back of rising shipments to smartphone production lines in China and Vietnam.

Chips accounted for 20 percent of the country's overall exports.

Shipments of biohealth products shot up 58.8 percent over the period. Exports of computers doubled on-year in August on increased teleworking schemes as well.

Exports of automobiles, on the other hand, dropped 12.8 percent over the period as major production lines in the country reduced their operations in August due to the summer vacation season and renovations.

Sales of mobile devices moved down 31.7 percent despite the release of new products by major players such as Samsung Electronics Co. amid the global pandemic.

Outbound shipments of petroleum products plunged 44 percent on-year last month as global demand sharply lost ground amid the virus pandemic. Overseas sales of petrochemical goods also shed 21.4 percent.

Exports of ships dipped 31.5 percent, while those of displays slipped 22.8 percent, the data showed.

While foodstuffs have been among beneficiaries of the virus pandemic, the sector's exports edged down 1.3 percent on-year in August, due to a sharp decrease in demand from Japan.

By destination, exports to China, the country's top trading partner, moved down 3 percent on-year in the month due to weak performance of machinery, auto parts and mobile segments.

Outbound shipments to the United States decreased 0.4 percent over the period, especially as demand for South Korean petroleum products sharply fell as US air carriers reduced their operations amid the pandemic.

The two countries accounted for 41.6 percent of South Korea's monthly exports.

Exports to the European Union slipped 2.5 percent and shipments to Japan dipped 20.7 percent over the period, as the slump in their manufacturing segments led to weaker demand for South Korean steel and machines.

Shipments to ASEAN members fell 17.8 percent due to the intensifying competition with Chinese display makers, along with the weak demand for textile products, according to the ministry.

"The resurgence of the COVID-19 cases, along with the trade dispute between the United States and China, poses a threat to South Korea's exports," Industry Minister Sung Yun-mo said in a statement. "With global oil prices staying low, we need to stay vigilant."

In July, exports decreased 7 percent on-year, following the 10.8 percent drop in June and the 23.8 percent decline in May.

South Korea earlier saw its outbound shipments rise 4.5 percent for the first time in 14 months in February, before the pandemic hit the global economy hard.

In 2019, the country's outbound shipments dipped more than 10 percent due to the low price of memory chips.

The weak exports have so far dealt a harsh blow to Asia's No. 4 economy.

Last week, the central bank slashed its annual economic growth outlook for South Korea, expecting a sharper-than-expected contraction of 1.3 percent.

The latest projection marked a sharp cut from the bank's estimate in May of a 0.2 percent contraction. It would mark the worst performance since 1998, when the Korean economy shrank 5.1 percent in the aftermath of the 1997 Asian financial crisis. (Yonhap)