S. Korean Exports Fall at Fastest Pace in Four Months

By Seyoon Kim

June 1 (Bloomberg) -- South Korea’s exports fell at the fastest pace in four months in May as demand from Japan, China and the U.S. weakened amid the global recession.

Overseas shipments decreased 28.3 percent from a year earlier to $28.2 billion, after April’s revised 19.6 percent drop, the Ministry of Knowledge Economy said in Gwacheon today. The country posted a trade surplus of $5.2 billion as imports fell more than exports.

South Korea avoided a technical recession in the first three months of this year, helped by record-low interest rates and government stimulus. The won’s 18 percent drop against the dollar in the past year has provided some relief for exporters including Samsung Electronics Co. and Hyundai Motor Co.

“Exports and imports are both falling as local and overseas demand remain weak,” said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. “Exports are likely to rebound toward the end of the year.”

Hanjin Shipping Co. and Hyundai Merchant Marine Co., South Korea’s biggest container lines, posted losses in the first quarter as the global recession hammered trade.

Last month’s drop in exports was the seventh in a row, extending the longest run of declines since 2002. Shipments to China, the nation’s largest market, declined 22.8 percent in the first 20 days of last month and sales to Japan fell 36.3 percent. Exports to the U.S. slid 20 percent.

Imports Tumble

Imports tumbled the most in more than a decade, falling 40.4 percent to $23.1 billion, as domestic demand weakened and prices of oil and other materials dropped, the ministry said.

The Kospi stock index rose 0.1 percent at 11 a.m. in Seoul. The won was little changed at 1,254.35 per dollar, compared with 1,254.25 before the trade figures were released.

Finance Minister Yoon Jeung Hyun said the decline in exports wasn’t a cause for concern and shipments will probably pick up this month.

There are signs that the worst of the slump may be over, both for South Korea as well as its biggest Asian trading partners. Factory production gained for a fourth month in April, and manufacturers’ confidence climbed to an eight-month high.

In China, manufacturing expanded for a third month in May, according to a Purchasing Manager’s Index released today. Japan’s industrial output surged the most in 56 years in April from March, a report showed last week.

Daewoo Shipbuilding & Marine Engineering Co., the world’s third-largest shipbuilder, said profit rose for a second straight quarter as the weaker won helped increase overseas earnings. Kia Motors Corp., South Korea’s second-biggest carmaker, expects unit sales to be unchanged in 2009, bucking the industrywide slump in demand.

South Korea’s economy grew 0.1 percent in the first quarter, rebounding from a 5.1 percent contraction in the previous three months.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net