Exports take hit

Expedite protective, boosting measures for the economy

It is expected that the Korean economy will bear more of the brunt of the global economic slowdown caused by the COVID-19 pandemic in the second quarter, especially with regard to exports. Thus, it was less of a surprise than a spirit-dampener when the Ministry of Trade, Industry and Energy on Friday said that exports fell 24.3 percent to $36.9 billion in April year-on-year. With imports down 15.9 percent to $37.9 billion, the country recorded a $950 million trade deficit for the month.

This was Korea's first trade deficit in eight years and three months. More worryingly, the statistics show that outbound shipments to its major trading partners ― China, the U.S. and Europe ― all fell; with the export of the mainstay semiconductors decreasing 15 percent to $7.1 billion. Shipments of petrochemical products and automobiles took a heftier blow, dropping more than 30 percent.
 
The economic dire reality posed by the COVID-19 pandemic is now starkly spelled out for the export-dependent Korea Inc.

Preceding indices had forecast that South Korea would not be immune to the pandemic-wrought recession. The first quarter saw a contraction in gross domestic product of 1.4 percent, and forecasts for the second quarter are not good. Everything from consumption, investment and the number of employed has been falling. According to a Statistics Korea's report on industrial activity for March, both the economic coincident indicator ― a gauge of current economic conditions ― and the economic leading indicator ― a barometer of future economic conditions ― sank to their lowest since the 2008 financial crisis.

Deputy Prime Minister and Finance Minister Hong Nam-ki in the first meeting of the Emergency Economic Central Countermeasures Headquarters held this week, said that “shock is manifesting in sentiment, the real economy and the job market.”

The second such meeting is slated for next week where details are expected on a Korean version of the “New Deal” to maintain employment levels and protect major industries.

We hope that more immediate and directly-felt plans to “create new types of jobs related to digital transformation, the Fourth Industrial Revolution and the post-coronavirus era” will be devised. Among the exports figures, it was noticeable that the shipment of biotech products was up 29 percent in April year-on-year, as demand for Korean test kits for the novel coronavirus increased.

President Moon Jae-in has called on government officials to act swiftly and decisively.

While we have been moving fast on the quarantine fight against COVID-19, it would be hard to say the same regarding government policy action. The administration has pledged 240 trillion won ($194 billion) to help relieve the economic woes from COVID-19. What is needed now is speedy action coupled with bold deregulation to protect the nation's workforce and shore up key industries.