Korea’s exports shrank year-on-year for a second straight month in April on sluggish demand from China and a decline in sales to the recession-hit eurozone, official figures showed on Tuesday.
But inflation last month hit a 29-month low, giving the central bank more scope for further monetary expansion if external risks grow for Asia’s fourth-largest economy.
April exports fell 4.7 percent year-on year to $46.3 billion while imports were down 0.2 percent at $44.1 billion, leaving a trade surplus of $2.2 billion, according to preliminary data from the Ministry of Knowledge Economy.
In March, exports and imports were both down 1.4 percent year-on-year at $47.38 billion and $44.93 billion respectively, for a trade surplus of $2.45 billion.
Exports to the Middle East jumped 35 percent year-on-year in April and rose by 5.6 percent for the United States, according to figures compiled over the first 20 days of the month.
But outbound shipments to largest trading partner China were up just 1.7 percent, and exports to Japan and the European Union shrank by 11.3 percent and 16.7 percent respectively.
The government said fewer work days in the month due to a general election holiday and high year-ago base numbers were partly to blame.
But in the coming months, it said, the lack of a solution to Europe’s problems, a slowing Chinese economy and a weakening yen would all pose downside risks to Korean exports.
Statistics Korea said separately the consumer price index was up 2.5 percent in April from a year earlier, the weakest rise since 2.4 percent in November 2009. It followed a 2.6 percent rise in March.
Month-on-month, the index was unchanged in April compared with a 0.1 percent fall in March.
The government attributed the eased inflation in April to a fall in the prices of food and industrial goods, including medicine.
April’s soft trade figures — along with worse than expected March industrial production data — could threaten the government’s 3.7 percent growth projection for the full year.
“Along with the tepid March output readings, the sets of data (Tuesday) leave little room for a rate hike and put more weight in the direction of further easing,” said Hyundai Securities chief economist Lee Sang-Jae.