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South Korea's February exports to China shrink as coronavirus hits supply chains
[SEOUL] South Korea's exports to China slumped in the first 20 days of February and overall sales per working day tumbled, indicating a grim outlook for Asia's fourth-largest economy as a conronavirus outbreak upends global supply chains.
Exports to China, where the epidemic originated, shrank 3.7 per cent on-year, customs data showed on Friday, signalling potentially worse to come over the next few months.
"Per-day exports to China probably was far worse" in seasonally adjusted terms, a Korea Customs Service official said after the data was released.
The outbound shipments are being seen as a bellwether for world trade as South Korea is the first major exporting economy to release data since the start of the epidemic.
Overseas sales rose 12.4 per cent in the first 20 days of February from a year earlier, though the uptick reflected less working days in the same period of the prior year.
On the other hand, average exports per working day suffered a sharp contraction, at 9.3 per cent after a 3.2 per cent fall seen for the first 10 days in February, as demand took a knock from the spread of the coronavirus.
Park Chong Hoon, a Standard Charted Korea economist, said the headline number was boosted by there being three more working days in the period this year than in 2019 due to the shifting Lunar New Year holiday.
"We should really focus on average exports per working day. The outbreak of the virus significantly tumbled shipments out of Korea, and it will only worsen in the coming months," Mr Park said.
While shipments to China and Singapore contracted, exports to the United States and Vietnam soared 24.2 per cent and 19.8 per cent each, as South Korean goods fast become substitutes for those made in China, analysts said.
A breakdown of the trade data showed overseas sales of memory chips and car components jumped 15.4 per cent and 40.6 per cent respectively, even as exports of vessels tumbled 29 cent.
South Korea reported its first death from the virus and a surge in new cases on Thursday, spurring concerns about the spread of the disease outside China.
Analysts expect the outbreak to hurt global growth, and gloom is spreading among South Korean manufacturers, as companies see more delivery bottlenecks, production disruption and a downturn in consumer spending.
In Japan, factory activity suffered its steepest contraction in seven years in February, offering the clearest evidence yet of the epidemic's damaging effects on Asia's trade-reliant economies.
South Korean chipmaker SK Hynix, the world's second-biggest maker of memory chips after compatriot Samsung Electronics, on Thursday said 800 of its workers had quarantined themselves as a precautionary measure to prevent the spread of the coronavirus after one trainee had close contact with a virus patient in the southeastern city of Daegu, the epicentre of an outbreak in South Korea.