Hanjin Shipping’s container terminal is seen at the Busan New Port. South Korea’s exports last month fell 8.1% from a year earlier, the sharpest fall since February 2013.

Reuters/Seoul

South Korean exports in April accelerated their decline for a fourth straight month to the worst in two years on lower oil prices and weak global demand, underscoring the need for more stimulus measures.
Exports last month fell 8.1% from a year earlier, the sharpest fall since February 2013, as shipments to the top markets of China, the US and the European Union posted losses, preliminary government data showed yesterday.
April exports lagged a median 6.8% fall projected by a Reuters survey, in which forecasts from the 20 analysts polled ranged from declines of 10.6% to 0.5% while none predicted a gain.
Imports into Asia’s fourth-largest economy plunged 17.8% from a year earlier, pushing the monthly trade surplus up to a record $8.49bn from a $8.38bn surplus in March, the Ministry of Trade, Industry and Energy data showed.
“The government will be sure to focus policy on boosting consumption as exports are no longer performing as they did in the past,” said Stephen Lee, an economist at Samsung Securities.
South Korean markets were closed for the international Labour Day holiday yesterday.
Shipments to the US fell 2.7% in April from a year earlier to post their first decline in a year after posting double-digit growth for nearly all of 2014 and early this year.
Exports to China, South Korea’s largest export market, dipped 5.2% in April over a year earlier – the third consecutive month of decline – while sales to the European Union fell 11.9%, the ministry said.
Below-target inflation should also allow the Bank of Korea to trim interest rates further from the current record-low level to shore up domestic demand, but analysts said the central bank would not rush to lower borrowing costs.
“The Bank of Korea will hesitate cutting rates further ahead of the pending rate hike by the US Federal Reserve. It’s more likely to tweak the ceiling on its loan facilities,” said Samsung’s Lee.
Mounting household debt after three rounds of rate cuts in less than a year keeps policymakers wary while the recovering local housing market means borrowings could rise above the current level, putting South Korea’s household debt-to-income ratio near the top among major economies.
Statistics agency data out early yesterday showed consumer prices rose 0.4% in April on-year, steady at a 16-year low set in March. Core inflation ticked down to 2.0% in annual terms from 2.1% in March.
The finance ministry said relatively solid domestic demand would begin pushing up the inflation rate going forward while the effects of oil price declines on annual inflation will begin fading from the second half of this year.
The average value of exports per working day was $1.93bn in April, slightly lower than $1.96bn in March, Thomson Reuters calculations show.