South Korea’s exports are being battered as virus slashes demand

South Korean exports for the first 10 days of April tumbled as the coronavirus health crisis upended global supply chains and knocked demand.

Asia’s fourth-largest economy is considered a bellwether for world trade and is the first significant exporting nation to release monthly trade data.

Exports for the first 10 days of the month dived 18.6 percent from the same period a year earlier, a sharp reversal from the 20.8 percent jump in March 1-10 period. Imports also dropped 13 percent, compared with a 14.5 percent rise in the previous month, according to Korea Customs Service data on Monday.

Shipments to China, South Korea’s biggest trading partner and where the virus first originated late last year, declined 10.2 percent, while those to the United States and the European Union slumped 3.4 percent and 20.1 percent, respectively.

By products, overseas sales of semiconductors, the country’s top export revenue generator, declined 1.5 percent, while those of petrochemical products, car components and wireless devices plummeted 47.7 percent, 31.8 percent and 23.1 percent each.

Earlier this month, data for March showed shipments had slipped back to contraction as the coronavirus ravaged the global economy although solid chip demand provided a rare bright spot as lockdowns across the world forced millions to use telecommuting technology.

Heavily dependent on exports of computer chips, smartphones, cars and ships, analysts say South Korea’s economy is headed for a contraction in the first half even after rate cuts, supplementary budget and the government’s rescue packages.

“As Monday’s data is based on short period of 10 days, it is premature to say the exports are back into the contraction phase in earnest … along with the plunge in global oil price, the coronavirus effect seems to have partially affected the data,” a customs agency official told Reuters news agency.

The pandemic’s global toll has rippled through to many businesses from airlines to the manufacturing and services sectors.

Kia Motors told its labour union in South Korea that it wants to suspend operations at three of its factories in the country as the coronavirus outbreak weighs on exports to Europe and the US.

The union has not yet decided whether to accept the plan – under which operations would be suspended from April 23-29 – because negotiations over pay are continuing, a union official said.

“Kia Motors is currently reviewing the suspension of some of its plants in Korea in response to declining global demand due to COVID-19. However, a decision has not been made at this time,” Kia Motors said in a statement.

 Its affiliate Hyundai Motor halted a line producing its Tucson sport utility vehicle in the southeastern city of Ulsan from April 13-17.

Hyundai and Kia Motors have suspended operations at most of their factories outside South Korea and China as the coronavirus spreads fast beyond Asia.