South Korea’s March exports rise as virus drives teleconference demand

(C) Reuters. FILE PHOTO: A truck drives between shipping containers at a container terminal at Incheon port in Incheon

By Joori Roh and Cynthia Kim

SEOUL (Reuters) – South Korean exports rose 10.0% in the first 20 days of March year-on-year as lockdowns across the world to prevent the coronavirus fueled demand for teleconferencing technology and components.

Outbound shipments of semiconductors, the nation’s major export, jumped 20.3% on-year, the Korea Customs Service data showed on Monday, better than a 15.4% rise seen a month earlier.

“Demand from cloud computing firms have boosted sales of server chips, while an increase in telecommuting in the United States and China has also been a main drive to huge server demand,” a trade ministry official told Reuters.

“But exports in April and May will worsen,” the official added, reflecting the significant fall in exporting contracts seen from February.

Chip giant Samsung Electronics (KS:005930) said last week the pandemic would hurt sales of smartphones and consumer electronics this year, although the chip market – which makes up about half of Samsung’s operating profit – would see demand growth.

Average exports per working day slid 0.4% during the period when eliminating the calendar effect, slower than a 9.3% decrease in Feb. 1-20 period. There were 1.5 more working days in the first 20 days of this month compared with the same period last year.

The fast-spreading virus has triggered a shutdown in factories across the globe, disrupting manufacturing and global supply chains.

Separately, a survey of 915 exporters on Monday showed Korean firms overwhelmingly expect shipments to fall in the second quarter as lockdowns and quarantines across the world hit global demand.

The Korea International Trade Association index of the outlook for exports for the April-June period plunged to a seven-year low, as demand from trading partners declined and raw material costs soared.

A growing number of analysts expect Asia’s fourth largest economy to contract this year, with S&P Global Ratings now seeing a 0.6% fall.

More than 305,000 people have been infected by the novel coronavirus across the world and more than 13,000 have died, with deaths in Italy surpassing the toll in China, where the outbreak began, according to a Reuters tally.

South Korea on Monday reported 64 new infections, the lowest since the peak on Feb. 29, and brought the national tally to 8,961.

A breakdown of the trade data also showed overseas sales of cars and smartphones rose 13.7% and 26.6%, respectively. Exports of vessels have tumbled 49.6%.

Exports to China, South Korea’s largest trading partner which takes in a quarter of total overseas sales, rose 4.9% on-year in the 20-day period, while those to the United States and the European Union jumped 27.2% and 13.5%, respectively.

Last week, the Bank of Korea slashed interest rates by 50 basis points to a record-low of 0.75% and parliament approved a 11.7 trillion won ($9.15 billion) extra budget.