The outlook for South Korea’s exports, which plunged in April due to the novel coronavirus, remains grim as the pandemic persists in key trading partners the US and Europe.

Korea’s exports fell 24.3 percent in April to $36.9 billion year-on-year due to weak global demand triggered by the novel coronavirus. The country’s trade balance posted a deficit of $950 million, the highest deficit in 99 months.

All major export items, including chips, shipbuilding, petrochemicals and automobiles, fell by double digits, according to the government data. Automobile exports amounted to $2.39 billion last month, down 36.3 percent on-year, the biggest drop in 10 years since the global financial crisis in 2009.

Last month, Korea’s exports to the US and the European Union plunged on-year by 13.5 percent and 12.8 percent, respectively, due mainly to factory shutdowns.

It is uncertain whether the trade balance will recover in May because Korea’s key trading partners still have lockdowns in place and many of their stores remain shut down.

The Industry Ministry attempted to play down the impact of those lockdowns, suggesting the trade balance would improve in May.

“Given that imports of capital goods and intermediate goods needed for the domestic manufacturing industry have continued, the trade deficit is never negative,” said Industry Minister Sung Yun-mo on Friday.

“If COVID-19 slows down around the world, exports will rebound and leap forward.”

Industry watchers, however, have different views.

“It is difficult to normalize exports of intermediate goods, which account for 70 percent of Korea’s exports, as soon as possible even if economic activities in foreign countries resume economic activities,” said Chung In-kyo, an international trade professor at Inha University.

“It is impossible for the trade balance to improve in May and the government should not give false hope to companies.”

As of May 1, the number of COVID-19 patients in the US exceeded 1.1 million and accounted for about a third of the world’s coronavirus patients. The cumulative number of coronavirus infections in Europe exceeded 1.4 million, with some countries extending state of emergency declarations.

In a recent business sentiment index survey by the Korea Economic Research Institute, the export forecast for May stood at 65.0, the lowest since the survey began in 1980. The baseline for the index is 100, with the maximum value being 200 and the minimum zero.

“Even if the lockdowns are gradually lifted in the US and Europe, it is difficult for exports to pick up immediately,” said Chung Yong-taek, head of research at IBK Securities.

“Domestic listed companies’ performance will show signs of recovery from the second half after bottoming out in the second quarter.”

By Shin Ji-hye (shinjh@heraldcorp.com)