ⓒ YONHAP News

The COVID-19 pandemic has influenced Korea’s outbound shipments both positively and negatively. Despite the worldwide spread of the virus, Korea’s exports fared relatively well last month, although the situation varied by industry. Here is Kim Dae-ho, director of the Global Economic Research Institute, to analyze the repercussions of the COVID-19 outbreak that has become a double-edged sword for Korea’s overseas sales. 

Fortunately, the COVID-19 epidemic has had a limited impact on South Korea’s exports. According to the Ministry of Trade, Industry and Energy, Korea’s outbound shipments came to 46.9 billion US dollars in March, down 0.2 percent year-on-year. The country’s exports have shown a turnaround since the fourth quarter of last year, raising hopes for an economic recovery. Despite the global spread of COVID-19, Korea’s exports remained relatively good last month, getting close to the level of March last year. 

Contrary to prior concerns over a major setback in Korea’s outbound shipments, exports fell only slightly in March. In early February, the average daily exports to China fell to 360 million US dollars in the aftermath of the spread of the virus throughout the country. 

But in the third week of March, the figure rebounded to 450 million dollars, recovering to the level of January. Korea’s exports to the United States and Europe also remained almost unchanged in March, in spite of the fast spread of the virus in those regions. 

There was a noticeable increase in the overseas sales of IT products and consumer goods linked to the infectious disease. 

Shipments of semiconductors, computers and IT equipment soared last month. Computer exports, in particular, rose more than 80 percent, as an increasing number of people around the world prefer remote working and online learning.

Exports of commodities associated with the prevention of COVID-19 also increased significantly. The spread of the virus has led to explosive global demand for high-quality Korean hand sanitizers. On a similar note, Korean disinfectants are selling well in different parts of the world. Above all, numerous countries are looking for highly efficient virus-detecting kits that have been developed by Korean bio firms earlier than anyone else. The United Arab Emirates, for example, has imported Korean-made diagnostic kits at a governmental level. Naturally, Korea enjoyed a sharp increase in the overseas sales of the test kits.

Exports of Korean-made IT products have surged, as more and more people across the world are working from home and refraining from in-person interactions. As South Korea has emerged as an exemplary case of virus disinfection, global demand for Korean hand sanitizers and virus test kits is on the rise. Exports of hand sanitizers in March came to 5.69 million dollars, representing a whopping 604 percent increase from the same month of last year. Shipments of diagnostic kits in March amounted to 48.65 million dollars, up 117 percent year-on-year. As of April 8, a total of 126 countries asked about either importing Korean-made COVID-19 test kits or receiving them as part of humanitarian aid. 

Even U.S. President Donald Trump has expressed hope to import Korean medical equipment to contain the spread of the virus. Korea saw its exports rise in rather unforeseen areas as well. 

Amid the COVID-19 pandemic, Korean exports of cosmetics products increased considerably. It is a surprising development, indeed, as the country has never expected it. Shipments of cosmetics to China, in particular, have skyrocketed. In China, where the virus is said to have originated, many local people who were under lockdown chose to take care of their skin at home. As a result, China has imported much more cosmetics from South Korea than before. 

Another Korean item that has unexpectedly been selling well overseas is processed food. Many frantic shoppers have been purchasing Korean canned food and instant noodles in preparation for a possible lockdown. Exports of these foodstuffs have increased a lot more than expected. I think we can still find an opportunity in a crisis. 

Korea’s shipments of cosmetics products amounted to a record high of 765 million dollars last month, up 48 percent from the previous month and 30 percent from a year earlier. While people in many parts of the world have been hoarding daily necessities for fears of a lockdown, panic-buying is not found in South Korea, which has relatively abundant commodities. It is little wonder that many countries are asking Korea to provide goods. Korea has received a deluge of emails from Singaporean buyers who hope to import toilet paper, while the U.S. has requested Korea to increase instant ramyeon noodle production. Out of fears of a shortage of food, some countries are looking for Korean rice. However, not all exporters have benefited from the COVID-19 epidemic.

Some industries are not fortunate enough to see their overseas sales rise. On the contrary, shipments of petrochemical products have decreased drastically due to plunging global oil prices. Automobile sales have fallen as well, as people refrain from moving around and choose to stay at home. Typically, people go to a car dealership several times to get a new car, as they need to examine various models carefully to purchase the rather pricey item. But people are reluctant to go outside these days, so the auto market is not in very good shape. 

Shipments of petroleum goods, one of Korea’s key export items, have fallen sharply on a steep decline in oil prices. Also, overseas sales of five Korean automakers dropped 20.9 percent in March on-year. In addition, a number of parts manufacturers have been hit hard by the disruption in global trade and supply chains. Factory operations have been suspended in the U.S. and Europe due to the spread of COVID-19, putting Korean parts makers at the risk of shutdowns. Unfortunately, the export situation is expected to worsen in April. 

COVID-19 has spread fast in the U.S. and in most European countries since late March, leading to factory shutdowns. The impact of their work stoppage on Korea’s exports is feared to materialize from April. Korean manufacturers have many of their production bases in other countries, including China, Vietnam and India. Plants in the virus-affected regions have been closed, while their governments enforce social distancing measures. Moreover, Korean tech experts are not allowed to travel to some countries. 

The Korean government has convened a series of emergency economic meetings to set relevant guidelines. In this difficult situation, I think local exporters should be given special consideration. 

COVID-19, which has now spread to the U.S. and Europe, is beginning to affect the global economy negatively. The Korean government plans to offer at least 36 trillion won or 33 billion dollars of additional trade finance to help out local exporters. In the face of the economic fallout from the pandemic, Korea’s exports help revive companies, stabilize the financial market and protect jobs. Consistent support should be given to boost exports, the backbone of the Korean economy.