South Korea’s Exports Decline Less-Than-Expected 19%

By Seonjin Cha

May 1 (Bloomberg) -- South Korea’s exports fell less than economists expected in April, adding to evidence that the economy’s slump may be past its worst.

Overseas shipments decreased 19 percent to $30.67 billion from a year earlier, after March’s 22 percent slide, the Ministry of Knowledge Economy said in Gwacheon today. The median estimate was for a 23.2 percent drop, according to a Bloomberg News survey of eight analysts. The country posted a record trade surplus of $6.02 billion last month as imports slumped.

Export declines may ease as demand from China begins to recover and as the won’s 22 percent drop against the dollar in the past year helps companies including Samsung Electronics Co. and Kia Motors Corp. weather a contraction in global trade. Manufacturers’ confidence rose to a seven-month high and March industrial production posted the longest run of gains in more than a year, reports yesterday showed.

“South Korea’s exports are being assisted by a weaker currency,” said Kwon Young Sun, senior economist at Nomura International Ltd. in Hong Kong. “Still, it’ll be difficult to avoid a drop in exports for some time until global demand starts to comes back.”

South Korea is one of the first Asian countries to report overseas trade figures for April. Exports rose 9.3 percent last month from March, the first consecutive gain, according to Bloomberg calculations based on the value of monthly shipments.

China’s manufacturing expanded for a second month in April, according to Chinese government data released today.

Shares Gain

South Korea’s stock market is closed today for the Labor Day holiday. The Kospi index rose 14 percent in April, the biggest monthly gain since November 2001, on optimism the global recession is easing.

Asia’s fourth-biggest economy grew 0.1 percent in the first quarter, rebounding from a 5.1 percent contraction in the previous quarter of 2008 as record interest-rate cuts and government spending underpinned domestic demand.

Overseas shipments make up about 60 percent of South Korea’s gross domestic product.

The South Korean and Chinese numbers show “global demand is no longer in freefall,” said David Cohen, an economist with Action Economics in Singapore. “Maybe the global downturn is bottoming out.”

Export Earnings

Hyundai Heavy Industries Co., the world’s largest shipbuilder, said yesterday first-quarter profit rose 13 percent as the weaker won boosted the value of overseas earnings. Kia Motors, South Korea’s second-biggest automaker, posted the highest profit in three years after it boosted domestic sales and overseas earnings were helped by the won’s decline.

South Korean imports slid 35.6 percent in April from a year earlier to $24.65 billion, today’s report showed.

“A down trend in exports will likely be inevitable for the time being because of high comparison base from a year earlier,” the ministry said in a statement. “Still, we expect the two-digit trade surplus trend to continue if the local currency and oil prices remain weak.”

Exports to the Oceania region, including Australia and New Zealand, gained 110.3 percent in the first 20 days of April from a year earlier. Exports to the European Union slid 1 percent.

Shipments to China, the nation’s largest overseas market, declined 20.5 percent during the first 20 days of last month, less than the 22.2 percent decrease in March. Exports to Japan dropped 34.1 percent and shipments to the U.S. fell 19.2 percent in the first 20 days of April.

Exports of vessels jumped 83.3 percent in the first 20 days of April from a year earlier and shipments of liquid-display equipment, such as computer panels and screens, rose 14.7 percent. Exports of automobiles slid 50.6 percent.

The ministry said today that the recent outbreak of swine flu posed a potential threat to global trade. “ The government will establish measures after closely monitoring export markets,” the statement noted.

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net