Germany, South Korea see coronavirus dragging down their exports

Manufacturers in the two large economies are being hurt by their dependence on Chinese supply chains, consumer demand.

Beach Container Terminal in California
China is the biggest trading partner for Germany and South Korea [File: Tim Rue/Bloomberg]

More economies in Europe and Asia are warning of significant economic risks due to the coronavirus outbreak, as travel and work restrictions disrupt exports to China.

Germany‘s trade outlook remains clouded by weaker global demand and the coronavirus epidemic adds another risk to exporters in Europe’s largest economy, its finance ministry said on Friday.

Germany’s export-dependent economy stagnated in the fourth quarter as industrial orders and output fell sharply in December, holding back overall growth in the wider eurozone.

In its monthly report, the finance ministry cited weak demand from abroad as a reason for the muted trade outlook. “Possible economic effects of the coronavirus also pose a risk to foreign trade developments in the coming months,” it added.

The coronavirus epidemic had disrupted economic growth in China and its spread to other countries could derail a projected recovery of the global economy in 2020.

China is Germany’s biggest trading partner, with manufacturers highly dependent on Chinese supply chains as well as Chinese demand for “Made in Germany” goods.

Finance Minister Olaf Scholz told the Reuters news agency on Wednesday that there were no signs of the economy entering a recession. He also added that Berlin was sticking to its economic growth forecast of 1.1 percent this year despite the coronavirus epidemic.

In South Korea, exports to China fell in the first 20 days of February as the virus outbreak upended supply chains between the Asian neighbours, despite overall exports rising 12.4 percent from a year earlier, according to customs data.

Exports to China, where the virus is believed to have originated, slid 3.7 percent year-on-year in the 20-day period, the Korea Customs Service data showed. China is South Korea’s biggest trading partner and takes in a quarter of total overseas sales.

Global shipments of semiconductors, the nation’s major exporting product, jumped 15.4 percent in value.

Average exports per working day in Asia’s fourth-largest economy, however, tumbled 9.3 percent during the period.

Concerns about the health crisis will be a main topic of debate at a Group of 20 finance leaders in Riyadh next week, said Bank of Japan Governor Haruhiko Kuroda on Friday.

In Japan, factory activity contracted at its sharpest pace in seven years in February, a private industry survey showed on Friday, adding to growing signs the world’s third-largest economy is on the brink of recession.

Source: Reuters