SEOUL: South Korea’s exports have fallen more sharply than expected in February as fewer working days and lower oil prices contributed to the largest fall in the country’s shipments overseas in two years.
Exports declined 3.4% from a year earlier to $41.46 billion, following a revised 0.7% drop in January, according to provisional data at the trade ministry. The February reading compares with the median 2.1% decline forecast in a Wall Street Journal survey of economists.
Imports plunged 19.6% from a year earlier to $33.80 billion in February, following an 11% decrease in January. The survey had forecast a 10.7% drop in February. The trade surplus widened to $7.66 billion in February from the previous month’s revised $5.40 billion. The February reading beat the poll’s projection of $6.16 billion surplus. The trade balance has been in the black since February 2012. The latest drop in exports marks the worst annual fall since February 2013 when Korea’s shipments shrank 8.6%.
The ministry said the three-day Lunar New Year holidays reduced working days in February this year to make the trade data look much weaker. The holidays came in January last year. On top of the data distortion, lower crude prices cut the value of Korea’s petrochemical and petroleum goods–one of its flagship export items, the ministry said. Exports averaged $2.18 billion in value per working day in February, compared with $2.0 billion a year ago.
By region, Korea’s February exports to China, the E.U. and Japan fell 7.7%, 30.7%, and 23.4% respectively from a year earlier respectively while its shipments to the U.S. expanded 7.4% on the recent recovery in America. The Bank of Korea is measuring the impact of its two previous base rate cuts last year on the economy before deciding whether or not to ease policy further this year to spur anemic growth. It stood pat in February for a fourth month. The BOK policy board is scheduled to meet on March 12.