According to data from the Ministry of Trade, Industry, and Energy (MOTIE), South Korea's exports fell for the eighth consecutive month in May.
Exports totaled $52.24 billion last month, down 15.2 percent from a year earlier.
This trend represents the most prolonged consecutive decline in exports from December 2018-January 2020.
Why it matters.
The prolonged decline in exports is a significant concern for the South Korean economy.
Exports account for about 40% of the country's GDP, so a drop in exports can significantly impact economic growth.
- The value of semiconductor exports fell by a staggering 36.2% year-on-year in May. The growth rate of semiconductor exports has been negative for ten consecutive months since August last year.
- In addition to semiconductors, exports of petroleum products (down 33.2%), petrochemicals (down 26.3%), and secondary batteries (down 4.9%) also fell.
- These declines were partially offset by increases in exports of automobiles (up 49.4%), secondary battery anode materials (up 17.3%), and general machinery (up 1.6%).
- Imports also fell to $54.34 billion in May, down 14% from last year, primarily due to a 20.6% decline in energy imports, including crude oil, natural gas, and coal.
The Big Picture
The prolonged decline in exports is a significant challenge for the South Korean economy.
The government is taking steps to address the problem, but there is still time to tell whether these measures will be successful.
The following are some of the critical challenges facing the government: The ongoing chip shortage is a significant impediment to economic growth.
The chip shortage is causing production delays in various industries, including automobiles, electronics, and appliances.
The war in Ukraine is also hurting exports. The war has disrupted trade flows and caused commodity prices to rise.
The slowdown in the Chinese economy is another major challenge. China is South Korea's largest trading partner, so a slowdown in the Chinese economy will significantly impact South Korean exports.