Korea: Exports and imports continue to contract in March
Merchandise exports fell 8.2% in March—a less pronounced drop than February’s revised 11.4% fall (previously reported: -11.1% year-on-year)—to total USD 47.1 billion. Merchandise imports decreased 6.7% in March—a slight recovery from February’s sharp 12.6% fall—and totaled USD 41.9 billion. March’s outturn comes amid a backdrop of ebbing global growth, weaker Chinese import demand, a rise in trade protectionism and lower semiconductor prices. Moreover, less working days compared to March 2018 also contributed to the decline in foreign trade.
The merchandise trade surplus narrowed to USD 5.2 billion from USD 6.4 billion in the same month a year earlier (February: USD 3.0 billion surplus). The 12-month moving sum of the trade balance also narrowed to a USD 66.3 billion surplus in March from the USD 67.5 billion surplus posted in February.
Commenting on March’s print was research analyst Young Sun Kwon at Nomura:
“we see downside risks to our 2019 current account surplus forecast of USD80bn (4.5% of GDP). Also, disappointing February activity and March export data suggest there is a risk of the Bank of Korea (BOK) delivering a 25bp rate cut to 1.50% earlier than in our base case of Q4 2019.”