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  • Korea’s Exports in 1Q Declined Due to Covid-19, but Fared, Compared to Rivals
    2020-05-07 hit 1375

    Korea’s Exports in 1Q Declined Due to Covid-19, but Fared, Compared to Rivals

     

    - KITA analyzed COVID-19 Impacts on Exports and Outlook” … Daily exports continue to decline since February -

    - Exports of household appliances that manage hygiene, medical supplies, health supplements, hygiene products, home beauty, home cooking, digital equipment are bullish -

     

    While Korea’s exports are decreasing due to the spread of COVID-19, its export volume decrease is less significant than that of major competitors, including the United States, Germany and Japan.

     

    According to a report titled COVID-19 Impacts on Exports and Outlook issued by the Institute for International Trade (President: Shin Seung-kwan) of the Korea International Trade Association on May 8th, Korea's exports between January and March declined by 1.4 percent, which was relatively less significant, compared to the United States (-3.1%), Germany (-4.0%), and Hong Kong (-10.7%). In particular, the rates of export decline of India (-12.8%) and China (-13.4%) exceeded 9 times that of Korea, demonstrating that those countries are hit hard by COVID-19.

     

    In the first quarter, Korea’s exports were able to fare compared to its competitors because the outbound shipments increased by 5.8 percent as the previously contracted volume were shipped out in spite of the fact that unit price fell by 7.7 percent due to the drop in semiconductor prices and the plunge in international oil prices.

     

    As a result, in the first quarter, Korea was able to grow 1.3 percent while the growth rates of China and the Eurozone were 6.8 percent and -3.3 percent, respectively, and the Unite States only grew 0.3 percent year-on-year.

     

    On the other hand, export stagnation trend is expanding. Daily exports were sluggish mainly in China, ASEAN and Latin America until March. The average exports of the United States and the European Union (EU) have turned from positive to negative in April due to the shutdown of automobile plants in the United States and Europe and shrinking consumption.

     

    By industry, exports of semiconductors, petrochemicals, displays and so on are decreasing due to the slowdown in demand in the downstream industries such as automobiles, smartphones, home appliances, and electric and electronics, and demand for steel products and machinery is also dropping due to shrinking manufacturing and construction industries. From February to April, exports of petroleum products, petrochemicals, ships, automobiles, and semiconductors declined, accounting for 72.4 percent of the average export decrease of the period.

     

    In the future, Korea’s exports will likely to see a U-shaped rebound as the world will gradually escape from the slump after experiencing the economic stagnation as advanced countries such as the United States and Europe, where the number of confirmed cases is skyrocketing lately, will start to experience the economic recession in the second quarter.

     

    Meanwhile, despite the shrinking demand following the spread of COVID-19, exports of Korean products that are recognized worldwide for excellence are becoming more promising due to the changes of consumption patterns and lifestyle. With COVID-19 as a trigger, awareness of hygiene and health has improved, and exports of household appliances that manage hygiene, medical supplies, health supplements, and hygiene products are expected to increase. Also, as new trends that people manage meals, beauty and workout at home through home beauty, home cooking, home workout activities are expanding, the exports of ready-made meals, kitchenware, and leisure goods will be bullish. Furthermore, the need for digital equipment for non-face-to-face communication and delivery has increased as the construction of home offices are required for work from home, online classes, and online consumption.

     

    Moon Byung-ki, a senior researcher at the Korea International Trade Association, said, With the global economic stimulus package, after third quarter, export opportunities are expected to expand mainly in promising consumer goods. He also stressed, While Korean companies minimize risks by diversifying their export market portfolios and seek new opportunities by reviewing management strategies, the government needs to pay more attention to overseas marketing activities of export companies and support them.


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