SEOUL -- South Korean exports plunged by double-digits in the January-March period for the second consecutive quarter, marking an ugly milestone as more domestic firms manufacture offshore and China becomes less dependent on imports.
During the three months ended Thursday, exports dropped 13.1% from a year earlier to $116 billion, based on preliminary data, South Korea's Ministry of Trade, Industry and Energy said Friday. Exports in March fell 8.2% on the year, the 15th straight monthly decline.
March's data represents an improvement following double-digit drop-offs in January and February. Wireless communication and other devices surged last month, thanks to shipments of Samsung Electronics' new Galaxy S7 smartphones. However, Cheong Seung-il, the deputy minister for international trade and investment, still struck a cautious tone. Although the performance was relatively good, "it is too early to say that our exports have safely got on the recovery track," he warned.
Petroleum products were among the hardest hit last month, plummeting 41.6% due to withering prices. Ship exports sank 28.9% as orders stalled amid the global economic stagnation.
Flat-screen displays, including liquid-crystal panels, were off by 24.2%, as Chinese companies and their enhanced production facilities put downward pressure on sales prices.
A quarter of South Korea's exports go to China, but those shipments fell by 12.2% in March. That exceeds the 3.8% drop for the U.S. and the 3.6% decline for Japan. Not only has the Chinese economy cooled down, but the country has also boosted its share of parts and other intermediate goods produced domestically.
The 1.9-year technological gap that existed between South Korea and China in 2012 shrank to 1.4 years in 2014, according to South Korea's Ministry of Science, ICT and Future Planning. As a result of China's technical advances, intermediate goods accounted for 71.8% of total imports from South Korea in 2015, down from 84.9% in 2000, data from the Korea International Trade Association shows.
The diminishing exports are also the result of South Korean companies fleeing growing manufacturing expenses at home. Samsung and LG Electronics are assembling smartphones, LCD televisions and white goods in Vietnam, with other companies following suit.
In South Korea exports account for over 40% of gross domestic product. That sizable proportion weighs on sentiments affecting capital expenditures and consumer spending. Imports are also accelerating their downward trend amid the stagnating domestic economy and slumping commodity prices.